Optimal concession contracts for landlord port authorities to maximize traffic volumes

Hsiao-Chi Chen and Shi-Miin Liu

Maritime Policy & Management, 2015, vol. 42, issue 1, 11-25

Abstract: This article analyzes optimal concession contracts offered by a landlord port authority to competing operators of container terminals. The port authority pursues traffic-volume maximization. Three contract schemes considered are fixed-fee, unit-fee, and two-part tariff. A two-stage game is constructed to characterize interactions between the port authority and two terminal operators. We discover that the fixed-fee contract is the best choice for the authority. Terminal operators' congestion costs and competition modes have no impact on this contract choice. Our results demonstrate that port authority's goal is an important factor in determining optimal concession contracts.

Date: 2015
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DOI: 10.1080/03088839.2013.863435

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