Strategic Pricing in Newly Privatised Ports

Asaf Ashar

Maritime Economics & Logistics, 2001, vol. 3, issue 1, 52-78

Abstract: Following privatisation, ports face an immediate need to set their prices. For this, they should assess their strategic environment, including: (a) the complex, network-like structure of their port system consisting of principal and intermediary parties; (b) the flow of services and related charges among the above-mentioned parties; (c) the differentiation and price discrimination in the market for port services; (d) the high concentration on both the demand and supply sides of this market; and (e) the mixture of competitive and cooperative behaviours among market agents. The methodology for price setting presented in this paper is based on a systematic assessment of the strategic environment. The methodology employs two novel diagnostic tools: a charge-flow diagram for analysing the allocation of port charges among principal and intermediate parties, and a game tree for analysing the port/competitors, action/reaction dynamics of the oligopolistic market. The methodology is discussed and illustrated using the case of the Port of Cartagena, Colombia.International Journal of Maritime Economics (2001) 3, 52–78. doi: 10.1057/palgrave.ijme.9100002

Date: 2001
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