Contracting in Ocean Shipping Market Under Asymmetric Information

Mingzhu Yu (), Ruina Yang, Zelong Yi () and Xuwen Cong ()
Additional contact information
Mingzhu Yu: Institute of Big Data Intelligent Management and Decision, College of Management, College of Civil and Transportation Engineering, Shenzhen University, Shenzhen 518060, P. R. China
Ruina Yang: School of Management, Xi’an Jiaotong University, Xi’an 710049, P. R. China
Zelong Yi: Department of Transportation Economics and Logistics Management, College of Economics, Shenzhen University, Nanhai Ave 3688, Shenzhen, Guangdong 518060, P. R. China
Xuwen Cong: College of Civil and Transportation Engineering, Shenzhen University, Shenzhen 518060, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2020, vol. 37, issue 02, 1-24

Abstract: In this paper, we not only develop a Stackelberg game to capture the unique characteristics of the ocean freight transportation, but also employ a screening model to address the contracting issue between one carrier and one freight forwarder under asymmetric information. The freight forwarder faces random demand from multiple shippers. In our framework, the spot price is positively correlated with the shippers’ demand. We first derive the forwarder’s optimal strategy, and then formulate the carrier’s contract design problem under symmetric and asymmetric information. Subsequently, we fully characterize the equilibrium parameters for a two-part tariff contract. The numerical experiments conducted thereafter reveal that (i) under a higher correlation between the shippers’ demand and the spot price, the carrier prefers a lower purchase price and the forwarder orders more through a contract in the peak seasons; (ii) when the market demand is extremely volatile, the carrier should raise the purchase price and the forwarder should order more through a contract; and (iii) with a higher degree of information asymmetry, the carrier prefers a higher purchase price while the forwarder relies more on the spot market than the contract market.

Keywords: Ocean shipping logistics; asymmetric information; screening model; two-part tariff contract (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.worldscientific.com/doi/abs/10.1142/S0217595920500062
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:apjorx:v:37:y:2020:i:02:n:s0217595920500062

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0217595920500062

Access Statistics for this article

Asia-Pacific Journal of Operational Research (APJOR) is currently edited by Gongyun Zhao

More articles in Asia-Pacific Journal of Operational Research (APJOR) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().