Abstract Purpose The paper addresses a transport market consisting of two firms with goals extending beyond pure profit maximisation. Considering that transport companies often have public owners and that managers have different objective that the owners, it is argued the firms maximise a weighted sum of profits, revenues and total consumer surplus. Methods The paper analyses equilibrium fares and quantities arising from collusion and competition on price (Bertrand) and quantity (Cournot), when the firms produce symmetrically differentiable services and have identical cost and goal functions. Results Special focus is given to analyzing how the firms’ costs, the degree of substitutability and complementarity between their services and their goal functions influence equilibrium prices in the three different competitive situations. The influence of parameters included in the model regarding the differences between the equilibrium prices is also addressed. Conclusions The study provides relevant knowledge for transport authorities of how transport firms respond to changes in competitive regimes depending on their objectives and competitive situation.
Market equilibriums for transport operators with several goals
European Transport Research Review ; 6 , 3 ; 241-251
2013-11-14
11 pages
Article (Journal)
Electronic Resource
English
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