A game theoretical analysis of port competition

This paper examines the effect of inter-port competition between two ports by applying a game theoretical approach. We construct a non-cooperative game theoretic model where each port selects port charges strategically in the timing of port capacity investment. We derive the Nash equilibrium and obtain some propositions from the equilibrium. We then apply the propositions to the case of inter-port competition between the ports of Busan and Kobe.

► A non-cooperative game model is constructed to analyze port competition.
► A unique Nash equilibrium pair of port charges is obtained analytically.
► The effect of capacity expansion on the port charges is examined.
► The model is applied to a case study of port competition between Busan and Kobe.