Location of Hubs in a Competitive Environment

Universitat Pompeu Fabra Economics WP No. 227

Posted: 30 Jun 1998

See all articles by Vladimir Marianov

Vladimir Marianov

Pontificia Universidad Catolica de Chile

Daniel Serra

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Charles ReVelle

Deceased

Date Written: 1997

Abstract

We offer a formulation that locates hubs on a network in a competitive environment; that is, customer capture is sought, which happens whenever the location of a new hub results in a reduction of the current cost (time, distance) needed by the traffic that goes from the specified origin to the specified destination. The formulation presented here reduces the number of variables and constraints as compared to existing covering models. This model is suited for both air passenger and cargo transportation. In this model, each origin-destination flow can go through either one or two hubs, and each demand point can be assigned to more than a hub, depending on the different destinations of its traffic. Links ("spokes") have no capacity limit. Computational experience is provided.

JEL Classification: CG1, R12, R53

Suggested Citation

Marianov, Vladimir and Serra, Daniel and ReVelle (deceased), Charles, Location of Hubs in a Competitive Environment (1997). Universitat Pompeu Fabra Economics WP No. 227, Available at SSRN: https://ssrn.com/abstract=103168

Vladimir Marianov (Contact Author)

Pontificia Universidad Catolica de Chile ( email )

Av. Vicuna Mackenna 4860
Department of Electrical Engineering
Santiago
Chile
(562) 354 4974 (Phone)
(562) 552 2563 (Fax)

Daniel Serra

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34) 93 542 16 66 (Phone)
(34) 93 542 17 46 (Fax)

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