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| Author: | Borger, B.De Proost, S. Dender, K. Van |
| Title: | Private port pricing and public investment in port and hinterland capacity |
| Journal: | Journal of Transport Economics and Policy
2008 : SEP, VOL 42:3 p.4527-562 |
| Index terms: | ports transport economics investments networks |
| Language: | eng |
| Abstract: | We research duopolistic pricing by congestible ports each sharing the same overseas customers and having a downstream, congestible transport network to a mutual hinterland. In the central set-up, local governments care about local welfare only and decide on the capacity of the port and the hinterland network. The results are that, firstly, profit-maximising ports internalise hinterland congestion in as far as it has an effect on their customers. Secondly, investing in port capacity reduces prices and congestion at each port, however also increasing hinterland congestion in the region. Investment in a port's hinterland likely increases port congestion and raises prices for port use, and decreases congestion and price at the competing port. Thirdly, the induced increase in hinterland congestion is a notable cost of port investment, strongly reducing the direct benefits of extra port activities. Fourthly, implementing congestion tolls on the hinterland road network raises both port and hinterland capacity investments. All results are illustrated numerically and policy implications are discussed. |
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