Pricing and revenue allocation mechanisms for regional logistics networks in Cyber-Physical Internet

Abstract

Cyber-Physical Internet technology links physical and virtual networks, facilitating communication and coordination for logistics stakeholders regarding their operational decisions. However, the optimal pricing within a regional logistics network incorporating Cyber-Physical Internet remains unexplored. To address this issue, this paper develops a Stackelberg game model between a carrier and a group of road operators. We derive and analyze the equilibrium decisions of the carrier’s logistics service fee and road operators’ tolls under distributed and horizontal partnership pricing strategies. Furthermore, we compare these two strategies and design a revenue allocation mechanism for road operators. Our theoretical and numerical analyses yield the following key findings. First, our results debunk the prevailing belief about toll pricing, demonstrating that road operators reduce their toll charges in response to a peer’s toll increase driven by rising unit variable road costs. Second, a collaborative pricing strategy among road operators consistently enhances market demand and profits by minimizing toll charges to the carrier. Third, revenue allocation among road operators is primarily based on unit variable road costs, ensuring fair distribution and encouraging cooperation for long-term benefits. This study enhances our understanding of both theoretical and practical aspects of pricing strategies for carriers and road operators within Cyber-Physical Internet.