Which terminals should expand investment: a perspective of internal non-cooperative competition in a port?

ABSTRACT

With the increasing container cargo throughput and the arising of port congestion, container ports start to choose the investment expansion strategy to increase the port efficiency and then to figure out the problem of port congestion. To analyze this strategy, we formulate a non-cooperative game model for a two-terminals-one-port system, and derive the optimal equilibrium outcomes of the investment expansion strategy and investment constant strategy. In the game, we find that when the investment parameter of expansion strategy and impact of handling efficiency on demand changes, both pure-strategy Nash equilibrium and mixed-strategy Nash equilibrium exist, and two terminals are more likely to choose the investment expansion strategy in most cases. Numerical simulation is applied to explore the equilibrium strategy under different circumstance.

KEYWORDS:

• Terminal competition
• non-cooperative
• investment expansion
• Nash equilibrium

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by National Natural Science Foundation of China [grant number 71974123]; Innovation Program of Shanghai Municipal Education Commission [grant number 2017-01-07-00-10-E00016].