01154346

Component

https://doi.org/10.3141/2166-09

http://scholar.google.com...+Gao&publication_year=2010

This study analyzes factors and competitive strategies for a market that is in transition from monopoly to duopoly and uses port competition as an example. The study models two ports that serve the same hinterland and compete strategically by using both pricing and capacity investment. Both ports are profit maximizers, and port expansions are lumpy, indivisible, and irreversible. The decision-making process of the two ports is analyzed with a two-stage game. In the first stage, two ports compete with each other on capacity expansion. In the second stage, they follow Bertrand competition with differentiated products conditional on realized port capacities. Within this formulation, the lack of credibility and ineffectiveness of preemptive pricing in market deterrence is shown by using the mutual best-response functions in the pricing subgame. In the capacity expansion game, the pure-strategy Nash equilibria for different scenarios characterized by the gain from expansion and the annual capital cost of investment are identified. The case study explains the past transition of market power, the fast development in Shenzhen port, and possible market structure with continued demand increase.

01221027

10-1980

English

pp 74-81

2010

Transportation Research Record: Journal of the Transportation Research Board

9780309142991

Print

Figures (3) ; Maps (1) ; References (27) ; Tables (2)

Case studies; Competition; Container terminals; Port capacity; Port operations; Pricing; Strategic planning; Water transportation

Port of Hong Kong; Port of Shenzhen

Hinterlands; Port expansion

Hong Kong (China); Shenzhen Shi (China)

Marine Transportation; Planning and Forecasting; Terminals and Facilities; I72: Traffic and Transport Planning

TRIS, TRB, ATRI

Jan 25 2010 10:54AM

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