Port Competition and Cooperation Under Emission and Privatization

Abstract

The study considers the competition and cooperation between mixed duopoly ports with service differentiation when both emission tax and partial privatization policies are implemented together. By developing three-game models between government and port enterprises, this paper first studies and compares, under different game scenarios, the optimal emission tax for mixed duopoly ports and privatization level for a semipublic port, as well as the optimal output (or pricing) and emission reduction of semipublic and private ports. Moreover, the profit and utility of the two ports, environment damage, consumer surplus, and social welfare are also compared, and the impacts of technology spillover for emission reduction and service differentiation on the decision-making of the government and port enterprises are discussed. We find that the optimal emission tax under a strategic cooperation scenario can reach a higher level, then the government needs more efforts to protect the environment. In addition, although port cooperation is conducive to maximizing social welfare and increasing port throughput, it harms the profitability of the two ports.