Railway Pricing Problem: The Effects of Monetary Decision-Making on a Duopolistic Freight Transportation Market

Rail system is considered as the most efficient mode of freight transportation. While it may be expected that demand of rail mode would be higher than other means of transportation, sometimes it has been observed that road transportation is much more applicable. Therefore, economic aspects of transportation market such as process and access charges are prominent. It must be considered that rail transportation has its own drawbacks. Low flexibility and fixed origins and destinations, as well as the relatively high rate of access charges are regarded as the most problematic limitations of rail systems. In current study, an evaluation is carried out using game theoretic approaches in order to determine demands of two competing systems including rail and road. Moreover, Stackelberg approach is utilized in order to calculate optimal access charge of rail infrastructure which maximizes profit of government. The results and findings of current study may contribute policy makers for decision-making in a competitive freight transportation market.