Tacit collusion between two terminals of a port

• We analyze in detail price matching policies of two container terminals in one port area.
• The main finding of our study is that price matching strategies facilitate tacit collusion between container terminals.
• Price matching policies between container terminals result in social welfare losses.

With the recent deregulation of container service rates and the establishment of more joint venture terminals in China, the separation of ownership and operation of container terminals will make price competition fierce in one port area. In this study we present an analysis of the price competition between two container terminals using a two-stage non-cooperative game theoretical model. Our main finding is that price-matching strategies facilitate tacit collusion between container terminals. Numerical simulation is applied to the container terminals at the Yangshan Deepwater Port in Shanghai, China.