Data Privacy in Bid-Price Control for Network Revenue Management Utku Karaca Erasmus University Rotterdam, 3000 DR, Rotterdam P.O. Box 1738, The Netherlands Ş. İlker Birbil University of Amsterdam, 11018 TV, Amsterdam P.O. Box 15953, The Netherlands Nurşen Aydın University of Warwick, Coventry CV4 7AL, United Kingdom Gizem Mullaoğlu Eindhoven University of Technology, 5600 MB Eindhoven, The Netherlands Abstract: Problem definition: We study a network revenue management problem where multiple parties collaborate and agree to share some of the network capacities. This collaboration is performed by constructing a large mathematical programming model available to all parties. The parties then use the solution of this model in their own bid-price capacity control systems. In this setting, however, the major concern for the parties is the privacy of their input data along with their individual optimal bid-prices and allocations. Methodology and Results: We first reformulate a general linear programming model, which can be used for bid-price control in a large set of network revenue management problems. Then, we address the data-privacy concern of the reformulated model, and propose an approach based on solving an equivalent data-private model constructed with input masking via random transformations. Our main result shows that after solving the data-private model, each party can safely recover only its own optimal capacity control decisions. We also discuss the security of the transformed problem in the considered multi-party setting. We conduct simulation experiments to support our results and evaluate the computational efficiency of the proposed data-private model. Managerial Implications: Our work provides an analytical approach and insights on how to manage shared resources in a network revenue management problem while ensuring data privacy. Constructing and solving the collaborative network problem requires information exchange between parties which may not be possible in practice. Including data-privacy in network revenue management with capacity sharing is new to the literature and relevant to practice. Keywords: Data privacy; network revenue management; collaboration; resource sharing; bid-price control 1. Introduction. Forming alliances is an important business strategy for a firm to streamline its costs to remain competitive. Alliances can be considered as the collaboration among several parties to conduct various activities such as allocating resources, sharing information, and providing complementary services. These partnerships can also be observed among competitors, like several firms joining their professional assets to manage a supply chain network (Granot and Sošić, 2005; He and Yin, 2015). Recently, logistics companies have started to collaborate by sharing empty vehicle capacities to overcome the problem of excess capacity in freight transportation (Speranza, 2018). One of the important advantages of collaboration is the increase in economies of scale. In airline revenue management, the carriers sign an alliance contract, called codeshare agreements, to share their flight capacities, and provide joint services. The companies can offer more products through joint services, leading to greater revenue opportunities in the long term (Topaloglu, 2012). A greater customer value can be achieved with increased flexibility in the provided services. In addition to economic benefits, the companies can also improve their reputation by improving the sustainability aspects of their 1 arXiv:2102.07178v2 [math.OC] 15 Oct 2021