A versatile framework for cooperative hub network development

This paper introduces a framework for cooperative hub network development. Building a joint physical hub for the transshipment of goods is expensive and, therefore, involves considerable risks for cooperating companies. In a practical setting, it is unlikely that an entire network will be built at once. Rather, the partners will have a more cautious attitude and build hub facilities one by one. In the proposed framework, each time a new hub is introduced, the partners will have the opportunity to decide whether or not they will participate (and thus, invest) in this network extension. In addition, joint cost savings will be allocated to the partners using the Shapley value, a well-known solution concept from cooperative game theory. This framework can accommodate any type of optimisation procedure for network design. [Received 21 September 2008; Revised 09 February 2009; Revised 29 April 2009; Accepted 04 May 2009]