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Mathematical Problems in Engineering
Volume 2012, Article ID 247509, 14 pages
http://dx.doi.org/10.1155/2012/247509
Research Article

Coordination Game Analysis through Penalty Scheme in Freight Intermodal Service

School of Traffic and Transportation, Lanzhou Jiaotong University, Lanzhou 730070, China

Received 10 May 2012; Revised 14 August 2012; Accepted 15 August 2012

Academic Editor: Wuhong Wang

Copyright © 2012 Jian Liu et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

We study coordination mechanisms through penalty schemes to cooperate the behavior of two firms as successive segment carriers to make transport plan separate in freight intermodal market. Based on the different cost structure and service level constraint to two firms, we compare the decision making in two possible decision systems, that is, centralized system and decentralized system. In a centralized system—the first best case as a benchmark is contrasted with decentralized system. In the decentralized system, a Stackelberg game model is formulated between two firms. Some discordant decisions would be made by firm I's overestimate motivation and firm II's undersupply motivation. Our primary objective is to design penalty schemes to coordinate the interactions for two firms. The study shows in a decentralized system, setting suitable penalty schemes can coordinate the two firms' decision. We also study the feasible range of penalty parameters, and some important managerial insights are then deduced. In the end, a numerical example is provided to verify the validity of results, some concluding remarks are presented subsequently.