Dimitrije D. Cvokic

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Two competitors, a Leader and a Follower, are sequentially creating their hub and spoke networks to attract customers in a market where prices have fixed markups. Each competitor wants to maximize his profit, rather than a market share. Demand is split according to the logit model. The goal is to find the optimal hub and spoke topology for the Leader. We(More)
We propose a model where two competitors, a Leader and a Follower, are sequentially creating their hub and spoke networks and setting prices. The existence of the unique Stackelberg and Nash pricing equilibria is shown. On the basis of these results we give the conclusion about existence of the profit maximising solution for the Leader.
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