Strategic Interactions between Transport Operators with Several Goals

This paper analyses competition between transport firms that have goals that extend beyond traditional profit maximisation. Specifically, operators maximise a weighted combination of profits and consumer surplus. We calculate equilibrium solutions for the case of symmetric firms producing symmetrically differentiated services, and compare the equilibrium prices, consumer surplus, and total surplus that arise from collusion, Cournot and Bertrand competition. The results are discussed in the light of the firms' pay-off functions, their costs, and the degree of substitutability or complementarity between the services. ? 2009 LSE and the University of Bath