Governments' sequential facility investments and ports' pricing under service differentiation and uncertainty Online publication date: Fri, 30-Jun-2017
by Hsiao-Chi Chen; Paul Tae-Woo Lee; Shi-Miin Liu; Tsung-Chen Lee
International Journal of Shipping and Transport Logistics (IJSTL), Vol. 9, No. 4, 2017
Abstract: This paper examines optimal facility investments of risk-averse governments and optimal pricing of risk-neutral ports under service differentiation and demand uncertainty. We construct a three-period game, in which governments 1 and 2 choose their facility investments in the first and the second periods respectively, and then the two ports decide their service prices in the third period. We find that government 2 will invest more in facilities if government 1 does so when variations of the market demand are large. However, government 2 may not own higher expected utility than government 1. Moreover, we explore how the model's parameters affect optimal behaviours of governments and their ports. All of these outcomes remain true if uncertainty comes from the cost-side, or if the demand for ports' services depends on their facility levels.
Online publication date: Fri, 30-Jun-2017
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Shipping and Transport Logistics (IJSTL):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email email@example.com