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A game theoretical approach to competition between multi-user terminals: the impact of dedicated terminals

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  • Evangelia N. Kaselimi
  • Theo E. Notteboom
  • Bruno De Borger

Abstract

In response to globalization and structural changes in logistics, firms in the transport industry have re-evaluated the scope of their activities [1]. A large number of shipping lines are vertically integrated to include terminal operations through shareholdings in or full ownership of dedicated terminal facilities. A number of terminal operating companies expanded their activities from their respective homeports to an international terminal network structure. These two developments have led to a competitive setting in which trans-national terminal operating companies and shipping lines vie for the control over terminal capacity. In this paper, a horizontal product differentiation model is introduced to analyze competition between container terminals using a game theoretic approach. We focus on a landlord port management system with long-term concessions agreements shaping the formal relationships between the Port Authority (PA) (who owns the land) and the private Terminal Operators (TOs) (who use the land for terminal activities). Starting from the linear city model of Hotelling [2], we develop a framework for Cournot competition between multi-user terminals. By comparing the results (expected payoffs for potential TOs and PAs) of different cases, this paper demonstrates how the shift toward a fully dedicated terminal impacts on intra-port and inter-port competition between the remaining multi-user terminals. The model is illustrated by referring to a case of terminal competition in a realistic setting.

Suggested Citation

  • Evangelia N. Kaselimi & Theo E. Notteboom & Bruno De Borger, 2011. "A game theoretical approach to competition between multi-user terminals: the impact of dedicated terminals," Maritime Policy & Management, Taylor & Francis Journals, vol. 38(4), pages 395-414, January.
  • Handle: RePEc:taf:marpmg:v:38:y:2011:i:4:p:395-414
    DOI: 10.1080/03088839.2011.588260
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    References listed on IDEAS

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    Cited by:

    1. Hidalgo-Gallego, Soraya & Núñez-Sánchez, Ramón & Coto-Millán, Pablo, 2017. "Spatial non-price competition in port infrastructure services," MPRA Paper 80417, University Library of Munich, Germany.
    2. Álvarez-SanJaime, Óscar & Cantos-Sánchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, José J., 2015. "The impact on port competition of the integration of port and inland transport services," Transportation Research Part B: Methodological, Elsevier, vol. 80(C), pages 291-302.
    3. Zhang, Jihua, 2016. "Quasi-landlord port financing in China: Features, practice and a contract theory analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 89(C), pages 73-88.
    4. Álvarez-SanJaime, Óscar & Cantos-Sánchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, José J., 2013. "Vertical integration and exclusivities in maritime freight transport," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 51(C), pages 50-61.
    5. Ferrari, Claudio & Parola, Francesco & Tei, Alessio, 2015. "Governance models and port concessions in Europe: Commonalities, critical issues and policy perspectives," Transport Policy, Elsevier, vol. 41(C), pages 60-67.
    6. Hong-Oanh Nguyen & Anthony Chin & Jose Tongzon & Mahinda Bandara, 2016. "Analysis of strategic pricing in the port sector: The network approach," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 18(3), pages 264-281, September.
    7. repec:spd:journl:v:67:y:2017:i:2:p:47-68 is not listed on IDEAS
    8. Wang, Hua & Meng, Qiang & Zhang, Xiaoning, 2014. "Game-theoretical models for competition analysis in a new emerging liner container shipping market," Transportation Research Part B: Methodological, Elsevier, vol. 70(C), pages 201-227.

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