Modeling the effects of competition on seaport terminal awarding

• A non-cooperative game with Inter- and intra-port competition.
• Four scenarios are analysed analytically.
• Explains a wide range of port concession arrangements observed.

In the maritime transport industry, a terminal concession often specifies the competition conditions during the concession period. This study proposes a game model with which the effects of competition for seaport terminal awards can be studied. The modeling results suggest that (a) a terminal operator always prefers to control more terminals in the region; (b) if all terminal operators expand their operations to every port, they will be worse off due to an increase of inter- and intra-port competitions, a situation similar to the prisoners׳ dilemma; and (c) when a port authority has significant market power, it prefers to introduce inter- and intra-port competition, rather than allowing one operator to monopolize all terminals. (d) multiple equilibria may be observed in concession awarding depending on market characteristics associated to a particular market. Anecdotal observations consistent with these modeling results are presented and discussed.