Network Competition - The Coexistence of Hub-and-Spoke and Point-to-Point Systems

The paper does not compare the full service carrier (FSC) business model and the new low cost carrier (LCC) business model in each characteristic, but addresses the network configuration. The analysis is performed from a theoretical point of view. The paper examines a game theoretical context where carriers are allowed to play three different strategies, point-to-point (PP), hub-and-spoke (HS) or multi hub (MH) and the condition under which asymmetric equilibrium may exist is identified. Also discussed is how the outcomes of the model can be used to describe the observed coexistence of different business models. The main result, however, shows that there can be an existence between an HS and a PP network and this result seems to be quite robust to variations in parameter and pricing rule.

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  • Authors:
    • Alderighi, Marco
    • Cento, Alessandro
    • Nijkamp, Peter
    • Rietveld, Piet
  • Publication Date: 2005-9

Language

  • English

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 01004526
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Sep 29 2005 3:57PM