DEMAND-DRIVEN FORMATION OF TRANSPORT NETWORKS: EMERGENCE OF HUB AND SPOKE STRUCTURE

Abstract

 This study develops a demand-driven transport network formation model that explains the emergence of the Hub-and-Spoke (HS) structure. To this end, we revisit and reformulate Mori (2012) model to provide a game-theoretic framework for understanding how passengers’ choices shape the transport network. We then show that this model can be viewed as a potential game, allowing us to characterize its equilibria using the potential function. Furthermore, we demonstrate that the potential maximization problem can be transformed into the Minimum Concave-cost Network Flow Problem (MCNFP). Based on this, we introduce a global optimization algorithm for solving MCNFP to derive the stochastically stable equilibrium. Through numerical experiments, we show that transport networks with an HS structure emerge as the stochastically stable equilibrium of the game.