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Pricing strategies for port competition and cooperation

Author

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  • Wei Xing
  • Qing Liu
  • Guangjun Chen

Abstract

This paper analyzes the effects of integration between two neighbor ports with a third port sharing the same overlapping hinterland. The merger (integrated port) can select either the price discrimination or uniform pricing strategy after integration. Our study reveals that port integration is always beneficial to the merger and the third port, but results in the reduction of consumer surplus and social welfare, regardless of the type of pricing strategy implemented. Further analysis shows that when the inland transportation cost to the ports is relatively low or sufficiently high, a better option is for the merger to adopt the price discrimination strategy. When port pollution is considered and has a relatively large impact, the integration of the two ports improves green social welfare for the region. This finding provides strong support for the ongoing port integration in China. In terms of pricing strategy, the uniform pricing strategy generates higher green social welfare when both inland transportation cost and pollution are relatively low, or both are significantly high. Otherwise, the price discrimination strategy generates the best result for the region.

Suggested Citation

  • Wei Xing & Qing Liu & Guangjun Chen, 2018. "Pricing strategies for port competition and cooperation," Maritime Policy & Management, Taylor & Francis Journals, vol. 45(2), pages 260-277, February.
    • Handle: RePEc:taf:marpmg:v:45:y:2018:i:2:p:260-277
    DOI: 10.1080/03088839.2017.1405290
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    Citations

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    Cited by:

    1. Xu, Lili & Lee, Sang-Ho, 2021. "Port integration and competition under public and private ownership," MPRA Paper 106127, University Library of Munich, Germany.
    2. Arthur Campbell & C. Matthew Leister & Yves Zenou, 2020. "Word‐of‐mouth communication and search," RAND Journal of Economics, RAND Corporation, vol. 51(3), pages 676-712, September.
    3. Liu Jiaguo & Zhang Huimin & Zhao Huida, 2021. "Blockchain Technology Investment and Sharing Strategy of Port Supply Chain Under Competitive Environment," Journal of Systems Science and Information, De Gruyter, vol. 9(3), pages 280-309, June.
    4. 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).
    5. Li, Zhi-Chun & Wang, Mei-Ru & Fu, Xiaowen, 2021. "Strategic planning of inland river ports under different market structures: Coordinated vs. independent operating regime," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    6. Tagawa, Hoshi & Kawasaki, Tomoya & Hanaoka, Shinya, 2022. "Evaluation of international maritime network configuration and impact of port cooperation on port hierarchy," Transport Policy, Elsevier, vol. 123(C), pages 14-24.
    7. Guo, Liquan & Ng, Adolf K.Y. & Jiang, Changmin & Long, Jiancheng, 2021. "Stepwise capacity integration in port cluster under uncertainty and congestion," Transport Policy, Elsevier, vol. 112(C), pages 94-113.
    8. Yang, Zhongzhen & Guo, Liquan & Lian, Feng, 2019. "Port integration in a region with multiport gateways in the context of industrial transformation and upgrading of the port," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 231-246.

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