Quantity discount pricing for rail transport in a dry port system

A dry port is an inland intermodal terminal connected to a seaport via railways. This paper studies a rail transportation pricing problem with quantity discounts in a dry port system consisting of one dry port and multiple shippers. This problem is modeled as a Stackelberg game where the dry port is the leader and the shippers are followers. An all-units quantity discount pricing scheme with a single breakpoint is adopted. Optimal properties are analyzed and the global optimal solution is derived. Numerical studies are conducted to examine the effectiveness of quantity discount pricing under various scenarios.