The Impact of Hinterland Access Conditions on Rivalry between Ports

This paper examines the interaction between hinterland access conditions and port competition. Competition between ports is treated as competition between alternate intermodal transportation chains, while the hinterland access conditions are represented by both the corridor facilities and the inland roads. We find that when ports compete in quantities, an increase in corridor capacity will increase own port’s output, reduce the rival port’s output, and increase own port’s profit. On the other hand, an increase in inland road capacity may or may not increase own port’s output and profit, owing to various offsetting effects. Essentially, while more road capacity reduces local delays and moderates the negative impact of own output expansion, it induces greater local commuter traffic and may moderate the reduction by local commuter traffic in response to a rise in cargo traffic, both of which reduces own output and profit. Similarly, inland road pricing may or may not increase own port’s output and profit. Finally, case examples for selected ports and regions are discussed.