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The impact of Panama Canal expansion on the container-shipping market: a cooperative game theory approach

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  • Qing Liu
  • William W. Wilson
  • Meifeng Luo

Abstract

Complicated relationships and interactions among stakeholders in the international container-shipping market make it difficult to estimate the impact of the market’s structural changes. This article uses cooperative game theory to analyze potential impacts of the Panama Canal (PC) expansion on the evolving competitive--cooperative relationships and the distribution of market power among the supply-chain players in the US container-import market. The hierarchical structure of the ocean shipping industry is captured using bi-level optimization models, with the ocean carrier (OC) acting as the market leader. The result shows that the enlarged ship size passing through the PC will increase the East Coast players’ market power by 32% while hurting the West Coast players by 22%. The subcoalition between the OC and the West Coast players is most likely to form prior to the PC expansion while the subcoalition between the OC and the East Coast players is preferred by the OC after the PC expansion. However, the total profit with competitive subcoalitions is always less than the grand coalition’s profit. The impacts of possible variations in service costs, as well as charges by the PC, the ports, and the railroad after the expansion, are also analyzed.

Suggested Citation

  • Qing Liu & William W. Wilson & Meifeng Luo, 2016. "The impact of Panama Canal expansion on the container-shipping market: a cooperative game theory approach," Maritime Policy & Management, Taylor & Francis Journals, vol. 43(2), pages 209-221, February.
    • Handle: RePEc:taf:marpmg:v:43:y:2016:i:2:p:209-221
    DOI: 10.1080/03088839.2015.1131863
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    Cited by:

    1. Thi Yen Pham & Ki Young Kim & Gi-Tae YEO, 2018. "The Panama Canal Expansion and Its Impact on East–West Liner Shipping Route Selection," Sustainability, MDPI, vol. 10(12), pages 1-16, November.
    2. Kahuina Miller & Tetsuro Hyodo, 2021. "Impact of the Panama Canal expansion on Latin American and Caribbean ports: difference in difference (DID) method," Journal of Shipping and Trade, Springer, vol. 6(1), pages 1-23, December.
    3. Hamed Hasheminia & Changmin Jiang, 2017. "Strategic trade-off between vessel delay and schedule recovery: an empirical analysis of container liner shipping," Maritime Policy & Management, Taylor & Francis Journals, vol. 44(4), pages 458-473, May.
    4. Pisit Jarumaneeroj & Amar Ramudhin & Jorge Barnett Lawton, 2023. "A connectivity-based approach to evaluating port importance in the global container shipping network," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 25(3), pages 602-622, September.
    5. Junseung Kim & Kyungku Kim & Kum Fai Yuen & Keun-Sik Park, 2020. "Cost and Scenario Analysis of Intermodal Transportation Routes from Korea to the USA: After the Panama Canal Expansion," Sustainability, MDPI, vol. 12(16), pages 1-20, August.
    6. Nikola Kutin & Patrice Guillotreau & Thomas Vallée, 2018. "Assessing competition on Maritime Routes in the Liner Shipping Industry through multivariate analysis," Working Papers halshs-01828643, HAL.
    7. Wang, Jian & Zhu, Wenbo, 2023. "Analyzing the development of competition and cooperation among ocean carriers considering the impact of carbon tax policy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).

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