Port Competition and Welfare Effect of Strategic Privatization
Private operation of port facilities is becoming increasingly common worldwide and many governments consider the privatization of public ports as a policy option. We investigate the effect of port privatization in a setting with two ports located in different countries, serving their home market but also competing for transshipment traffic from a third region. Each government chooses whether to privatize its port or to keep port operations public. We show that there exist equilibria in which the two governments choose privatization. In these equilibria, national welfare is higher relative to a situation where both ports are public. Since port charges are strategic complements, privatization can act as a valuable precommitment tool for the two governments and allows for a better exploitation of the third region. However, from the perspective of maximizing the joint national welfare of both port countries, there is an inefficiently low incentive to privatize. It is also shown that a country with a smaller home market has a larger incentive to choose private port operation.
|Date of creation:||24 Jan 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Vogelsanger Str. 321, Alte Wagenfabrik, 50827 Köln|
Phone: ++ 49 (0) 221 277 29 100
Fax: ++ 49 (0) 221 277 29 400
Web page: http://www.ewi.uni-koeln.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chaim Fershtman & Kenneth L Judd, 1984.
"Equilibrium Incentives in Oligopoly,"
642, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Corts, Kenneth S. & Neher, Darwin V., 2003. "Credible delegation," European Economic Review, Elsevier, vol. 47(3), pages 395-407, June.
- DE BORGER, Bruno & PROOST, Stef, 2012.
"Transport policy competition between governments: A selective survey of the literature,"
2012014, University of Antwerp, Faculty of Applied Economics.
- De Borger, Bruno & Proost, Stef, 2012. "Transport policy competition between governments: A selective survey of the literature," Economics of Transportation, Elsevier, vol. 1(1), pages 35-48.
- Chaim Fershtman & Kenneth L. Judd & Ehud Kalai, 1990.
"Observable Contracts: Strategic Delegation and Cooperation,"
879, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Fershtman, Chaim & Judd, Kenneth L & Kalai, Ehud, 1991. "Observable Contracts: Strategic Delegation and Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 551-59, August.
- Bruno De Borger & Stef Proost & Kurt Van Dender, 2007.
"Private port pricing and public investment in port and Hinterland capacity,"
Working Papers Department of Economics
ces0708, KU Leuven, Faculty of Economics and Business, Department of Economics.
- Bruno De Borger & Stef Proost & Kurt Van Dender, 2008. "Private Port Pricing and Public Investment in Port and Hinterland Capacity," Journal of Transport Economics and Policy, University of Bath, vol. 42(3), pages 527-561, September.
- DE BORGER, Bruno & PROOST, Stef & VAN DENDER, Kurt, 2007. "Private port pricing and public investment in port and hinterland capacity," Working Papers 2007019, University of Antwerp, Faculty of Applied Economics.
- Das, Satya P., 1997. "Strategic managerial delegation and trade policy," Journal of International Economics, Elsevier, vol. 43(1-2), pages 173-188, August.
- Toshihiro Matsumura & Noriaki Matsushima, 2010.
"Airport privatization and international competition,"
ISER Discussion Paper
0792, Institute of Social and Economic Research, Osaka University.
- Toshihiro Matsumura & Noriaki Matsushima, 2012. "Airport Privatization And International Competition," The Japanese Economic Review, Japanese Economic Association, vol. 63(4), pages 431-450, December.
- Michael L. Katz, 1991.
"Game-Playing Agents: Unobservable Contracts as Precommitments,"
RAND Journal of Economics,
The RAND Corporation, vol. 22(3), pages 307-328, Autumn.
- Michael L. Katz., 1991. "Game-Playing Agents: Unobservable Contracts as Precommitments," Economics Working Papers 91-172, University of California at Berkeley.
- Katz, Michael L., 1991. "Game-Playing Agents: Unobservable Contracts as Precommitments," Department of Economics, Working Paper Series qt79b870w0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- R. Midoro & E. Musso & F. Parola *, 2005. "Maritime liner shipping and the stevedoring industry: market structure and competition strategies," Maritime Policy & Management, Taylor & Francis Journals, vol. 32(2), pages 89-106, April.
- Mori, Tomoya & Nishikimi, Koji, 2002. "Economies of transport density and industrial agglomeration," Regional Science and Urban Economics, Elsevier, vol. 32(2), pages 167-200, March.
- Christopher M. Anderson & Yong-An Park & Young-Tae Chang & Chang-Ho Yang & Tae-Woo Lee & Meifeng Luo, 2008. "A game-theoretic analysis of competition among container port hubs: the case of Busan and Shanghai 1," Maritime Policy & Management, Taylor & Francis Journals, vol. 35(1), pages 5-26, February.
- Spagnolo, Giancarlo, 2005.
"Managerial incentives and collusive behavior,"
European Economic Review,
Elsevier, vol. 49(6), pages 1501-1523, August.
- Mantin, Benny, 2012. "Airport complementarity: Private vs. government ownership and welfare gravitation," Transportation Research Part B: Methodological, Elsevier, vol. 46(3), pages 381-388.
- Simme J Veldman & Ewout H Bückmann, 2003. "A Model on Container Port Competition: An Application for the West European Container Hub-Ports," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 5(1), pages 3-22, March.
- Takahashi, Takaaki, 2004. "Spatial competition of governments in the investment on public facilities," Regional Science and Urban Economics, Elsevier, vol. 34(4), pages 455-488, July.
When requesting a correction, please mention this item's handle: RePEc:ris:ewikln:2013_013. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Williams)
If references are entirely missing, you can add them using this form.