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Location-price competition in airline networks. (English) Zbl 1442.90117

Summary: This paper addresses location-then-price competition in airline market as a two-stage game of \(n\) players on the graph. Passenger’s demand distribution is described by multinomial logit model. Equilibrium in price game is computed through best response dynamics. We solve location game using backward induction, knowing that airlines will choose prices from equilibrium for the second-stage game. Some numerical results for airline market under consideration are presented.

MSC:

90B80 Discrete location and assignment
91A20 Multistage and repeated games
91A43 Games involving graphs
91B54 Special types of economic markets (including Cournot, Bertrand)
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References:

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