Game Models of Competition in the Cargo Transportation Market

Abstract

This paper presents two novel game models of competition in the cargo transportation market. In the proposed models, the type of carriers does not matter. They can be air carriers, sea carriers, rail or road carriers. However, the cargo transportation itself must be intermodal. The first model describes the competition of equal players acting independently without the right to form coalitions. For the individual carrier problems, Nash equilibrium is used to find the optimal decisions for which each carrier obtains the greatest profit. Nash equilibrium values are obtained for delivery volumes and prices, as well as players’ profits. The second model examined describes the competition of a number of stronger players with a number of weaker ones. As a game model of such competition, a modified Stackelberg model was considered. The model assumes an arbitrary number of equal leaders and an arbitrary number of equal followers. Within the framework of such a model, were determined the values of cargo transportation, the prices for deliveries, as well as the players’ profits in the equilibrium situation. A numerical example is presented to demonstrate the validity and capability of the model.