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Promoting Incentives: Performance Improvement in Container Port Terminals

Author

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  • Sergi Saurí

    (School of Civil Engineering and CENIT (Center for Innovation in Transport), Technical University of Catalonia (UPC), 08034 Barcelona, Spain)

  • Francesc Robusté

    (School of Civil Engineering and CENIT (Center for Innovation in Transport), Technical University of Catalonia (UPC), 08034 Barcelona, Spain)

Abstract

Most ports in developed countries have undergone the process of privatization. One of the often-cited drawbacks of this phenomenon is that, in the case of little competition among private operators, privatization simply represents a change from a public monopoly to a private one. This paper focuses on concessions of container terminals with market power. The aim is to define incentive mechanisms to encourage a private terminal operator and a stevedore company to reduce tariffs and increase the terminal's productivity at such a level as if they were in competition. For this purpose, the problem has been analyzed in the context of the principal-agent theory. Particularly, a moral hazard problem with hidden information has been used. The model was successfully applied to a container terminal concession. The results suggest that an improvement both in the terminal's productivity and in tariffs is possible through an annual fee that is based on an estimation of the terminal's cost and tariffs in a competitive market and is paid by the private operator to the port authority.

Suggested Citation

  • Sergi Saurí & Francesc Robusté, 2012. "Promoting Incentives: Performance Improvement in Container Port Terminals," Transportation Science, INFORMS, vol. 46(2), pages 233-246, May.
    • Handle: RePEc:inm:ortrsc:v:46:y:2012:i:2:p:233-246
    DOI: 10.1287/trsc.1110.0380
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    References listed on IDEAS

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    6. Zheng, Shiyuan & Luo, Meifeng, 2021. "Competition or cooperation? Ports’ strategies and welfare analysis facing shipping alliances," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 153(C).

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