Dynamic Ticket Pricing of High-Speed Railways and Airlines Based on Customer Choice

Abstract

This paper presents a bi-level game model to simulate the high-speed passenger transport market which is dominated by high-speed rail and airlines. The upper-level model represents the two-player, non-cooperative gaming between transport operators; the lower-level model ensures the minimum of generalized travel cost for all travelers. The dynamic interaction between operators and travelers is portrayed as a Stackelberg game. A heuristic solution algorithm based on sensitivity analysis is designed to solve it. In the numerical experiment, the competition between high-speed rail and an airline in the Beijing-Shanghai corridor is analyzed. Model parameters are determined by examining survey data and the equilibrium ticket price on this corridor is calculated. Results show that the model can simulate the dynamic interaction between transport operators and passengers quite well, and that the model can provide a reference for regional transport ticket pricing.