Game Theory in Transport and Logistics
Game Theory in Transport and Logistics
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Sajjad Khaksari
Politecnico di Torino
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BRT BRT
BRT is faster (express) and more organized DP is not so fast and organize
BRT wants her fee max. 90 days DP wants her fee max. 120 days
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! IVECO
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! OV
BRT dp
As we can imagine the essential elements in this Game are the following:
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II. Two games between OV and her suppliers
OV find herself in front of two players (DP and BRT). So she could play with both. As we
describe above, she prefer normally DP but sometime, in some case she doesn't want to
risk and prefer to use the BRT services. This game looks like more similar to the
DYNAMIC GAME and information are almost COMPLETE&PERFECT INFORMATION.
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Why it is dynamic and complete information? Might because in the first time period,
singleton OV play her game and chooses to pay the fixed fee of supplier in the day of
service or after 90 days (in the case of BRT) or after 120 days (in the case of DP).
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Then in the second time player 2 (DP or BRT) observes the action of first player and with
knowledge about the strategy OV has decided, will play her part. Payoffs are U1 ( a1, a2)
and U2 ( a1, a2).
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! 4,3 5,3
! 90 120
! BRT DP
! OV OV
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! 0 90 4,3 0 120 5,3
! BRT DP
! 0 0,5 0 0,5
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OV plays the dynamic game with BRT OV plays the dynamic game with DP
So, as we see in the above diagrams, OV wants to reach her maximum payoff (5). It
means that paying the fixed fee of the Transport Service, not on the day of service, but
after a long time. Might for this reason OV normally prefer DP rather than BRT.
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When OV play 120 and DP also play 120, that is the Perfect Nash Equilibrium in the
mind of OV. For OV playing 0 (pay today) is not perfect strategy but for her opponents
(DP and BRT) its a perfect strategy. OV never go to play this strategy, except a grim case!
So maybe we can say that the game has just 1 NE for each of players.
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! 4,3
! 90 120 5,3
! BRT DP
! 90 0 0,5 120 0 0,5
! OV OV
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! 0 90 4,3 0 120 5,3
! BRT DP
! 0 0,5 0 0,5
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Before conclude the case, its important to tack account about the global atmosphere of
the market. Transport & Logistics companies, they have created some natural and
strategical Entry Barriers. Some of these barriers are depend to the needs of investing
a huge amount of money to purchase tangible and intangible assets, such as lands,
magazine, parking space, software and hardware logistic devices plus truck and vehicles.
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However, there is even other impenetrable barriers, that invented by the regulator. In this
case the regulator is Ministero delle Infrastrutture e dei Trasporti. The rules from the
ministry and the standards, they ask, are adversity enough to avoid any new entrance!
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These barriers gave to the market, the multi-poly structure. This presented
infrastructure, forced some of the companies to compete with others positively, but in the
another hand, some others, abuse from the monopoly situation. Furthermore, in the such
atmosphere, the probability of Collusion is high.
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Resources: To write this paper we use books and websites has addressed in below.
✓ Jeffrey R. Church and Roger Ware. Industrial Organization: A Strategic Approach. New York:
McGraw-Hill, 2000.
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✓ Robert Gibbons. A Primer in Game Theory: Harvester Wheatsheaf, 1992.
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✓ Lecture notes of Prof. Luigi Buzzacchi
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✓ A. Villa, De Toni, Palazzolo; Gestione della produzione, Isedi, 2013
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✓ DHL web site
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✓ Trasporto merci su strada, è una pubblicazione a cura di: ANFIA - Associazione Nazionale
Filiera Industria Automobilistica – Area Studi e Statistiche Automobile Club d’Italia –
Area Professionale Statistica
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✓ Ministero delle Infrastrutture e dei Trasporti, DIPARTIMENTO PER I TRASPORTI, LA
NAVIGAZIONE ED I SISTEMI INFORMATIVI E STATISTICI, DIREZIONE GENERALE PER I
SISTEMI INFORMATIVI, STATISTICI E LA COMUNICAZIONE; UFFICIO DI STATISTICA,
SISTEMA STATISTICO NAZIONALE; Conto Nazionale delle Infrastrutture e dei Trasporti
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✓ Analisi e previsioni per il trasporto merci in Italia, © Confcommercio-Imprese per l’Italia
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✓ Logistics and supply chain management: creating value-adding networks / Martin
Christopher. -- 4th ed. PEARSON EDUCATION LIMITED
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✓ O'Brien, Marakas; Introduction to information system; 16th edition
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✓ Prof. Alessandro Perego; Politecnico di Milano
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✓ Personal Transport and Logistic blog of Sajjad Khaksari: http://italiancoaddress.blogspot.it