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The LNG Market: A Game Theoretic Approach to Competition in LNG Shipping

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  • Konstantinos G Gkonis

    (Laboratory for Maritime Transport, School of Naval Architecture and Marine Engineering, National Technical University of Athens, Iroon Polytechneiou 9, Zografou 15773, Greece)

  • Harilaos N Psaraftis

    (Laboratory for Maritime Transport, School of Naval Architecture and Marine Engineering, National Technical University of Athens, Iroon Polytechneiou 9, Zografou 15773, Greece)

Abstract

The Liquefied Natural Gas (LNG) trade is one of the most promising sectors in energy shipping. It is expected that competition will increasingly develop in the shipping segment of the LNG chain, which at least in its first phases will have the characteristics of an oligopolistic market. The LNG shipping market context is appropriate for the adoption of a (non-cooperative) game theoretic analysis framework to support decision-making. This paper focuses on oligopolistic competition in LNG shipping over the transportation capacity supplied to a trade route by competing shipping companies. It also examines the possibility of non-cooperative collusion among the competing parties, in order for them to share higher profits. The conclusions concern the optimal level of capacity supply by the competitors, under certain interaction settings, and the conditions under which they can sustain Pareto efficient equilibria. Maritime Economics & Logistics (2009) 11, 227–246. doi:10.1057/mel.2009.2

Suggested Citation

  • Konstantinos G Gkonis & Harilaos N Psaraftis, 2009. "The LNG Market: A Game Theoretic Approach to Competition in LNG Shipping," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 11(2), pages 227-246, June.
    • Handle: RePEc:pal:marecl:v:11:y:2009:i:2:p:227-246
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    Cited by:

    1. Kian-Guan Lim & Michelle Lim, 2020. "Financial performance of shipping firms that increase LNG carriers and the support of eco-innovation," Journal of Shipping and Trade, Springer, vol. 5(1), pages 1-25, December.
    2. Chen, Hsiao-Chi & Liu, Shi-Miin, 2016. "Should ports expand their facilities under congestion and uncertainty?," Transportation Research Part B: Methodological, Elsevier, vol. 85(C), pages 109-131.
    3. Satoru Hashimoto, 2021. "Why Doesn t Japan have a Natural Gas Pipeline Network? Consideration from the Determinant of the Choice between LNG Tank Trucks and Pipelines," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 346-353.

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