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Price-cutting or incentive? Differentiated competition between regional asymmetric ports

Author

Listed:
  • Lu, Bo
  • Fan, Lijie
  • Wang, Huipo
  • Moon, Ilkyeong

Abstract

In the process of port integration, the competition between ports in overlapping hinterlands has intensified. Ports adopt differentiated strategies to compete, such as incentive strategy and price-cutting strategy. To analyze the optimal competitive strategies for asymmetric ports in the same region, this article develops a game theory model for port competition between superior and inferior ports. Different from the traditional price competition in ports, this article innovatively explores the market mechanism of incentive strategies based on the actual operation of ports. It also considers the economic status and reputation advantages of ports. Results show that if superior ports follow inferior ports to adopt the price-cutting strategy, it will lead to the prisoner's dilemma. And incentive strategies are the dominant strategies for superior ports, which has two effects: service quality effect and price distortion effect. Incentive strategies are conducive to incentivizing shipping companies and improving port profits.

Suggested Citation

  • Lu, Bo & Fan, Lijie & Wang, Huipo & Moon, Ilkyeong, 2024. "Price-cutting or incentive? Differentiated competition between regional asymmetric ports," Transport Policy, Elsevier, vol. 147(C), pages 215-231.
    • Handle: RePEc:eee:trapol:v:147:y:2024:i:c:p:215-231
    DOI: 10.1016/j.tranpol.2024.01.003
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