A Game Theory Approach to Railroad-Shipper Negotiations

Game theory provides a framework for analyzing problems when there are a small group of participants. This is unlike the economic model of perfect competition, which requires several participants. Game theory began as a way to analyze parlor card games, but has developed into a rigorous analytical technique for evaluating strategic interactions. These interactions could be between hostile countries, competing companies, or between a shipper and railroad. In fact, game theory provides a useful structure for analyzing the interactions between a shipper and a railroad. This paper models such interactions