Research On Airport Competition Based On Game Theory

As the deepening of economic globalization nowadays,modern airport is not only the connection point between the air transportation and ground transportation,but also a business card of a city or a country,and even the key to occupy market resources.A city would be the economic leader of the region if its airport could become a regional hub airport,and it would be the international economic trade center if the airport could be an international gateway hub airport.Therefore,it occurred that airports contend for passengers and cargos,and it becomes increasingly fierce.Based on the situation,this paper is named of “Research on Airport Competition Based on Game Theory” and studied the following contents.On the basis of domestic and overseas researches on airport competition,airport competition theoretical basis was summarized,including the connotation,the causes,contents and forms of airport competition.The relationship between airport,airlines and passengers,the influences of airport competition on airports,airlines and passengers were stated.A brief overview of game theory and introduction about several classic game models were made.Flight competition is one of the main contents of airport competition,and the price is one of the dominating strategies.Congestion cost of airport was brought in the Bertrand model and price was thought as the main gist in competition to establish the airport flight competition game model,and it was solved.It was found from the equilibrium solution that the price,flights and revenue of the airport were not only influenced by its own capacity,but also the capacity of its rival.In addition,the increase of airport capacity would cause the price falling for both airports,increase of its own flights and revenue but decrease for the rival.Based on Hotelling model and considering congestion cost of airport,airport passenger competition game model was built for two airports and two airlines.Airports and airlines were divided into two pairs according to their vertical relation.Then games in the situations of no vertical alliance,one-side vertical alliance(only a pair of airports-airlines leagues)and two-side vertical alliance(two pairs of airports-airlines league)were discussed for symmetricmarket.Airport passenger competition strategies were analyzed according to the equilibrium solutions,and it was found that vertical alliance would provide more passengers for airport but no more income.So airport was not willing to adopt vertical alliance strategy.However,airport would take the measure of vertical alliance to avoid a large revenue loss caused by passenger reduction if the other airport chooses vertical alliance strategy for more passengers.On the basis of airport passenger competition game model for symmetric market,asymmetric market was brought in.Then games in the situations of no vertical alliance,one-side vertical alliance and two-side vertical alliance were discussed for asymmetric market.Airport passenger competition strategies were analyzed according to the equilibrium solutions too.And it was found that vertical alliance would guarantee not only more passengers but also more earnings to airport.So airport would take the measure of vertical alliance in the competition.