A Hotelling Model Approach to Container Port Competition

This paper adopts a Hotelling model to study the container port competition in a so called "dual gateway-port system", which contains two port cities, and two terminals belonging to the two port cities respectively. The two port governments compete in port dues and the two terminals decide service prices and service qualities. We study two models with different terminal competition intensity: the two terminals are owned by two different operators and the two terminals are centralized under one operator, respectively. In these two models, we derive the port due, terminal service price and service quality equilibria. Through the numerical analysis, we investigate the competition outcome sensitivity.