Capacity sharing within a shipping alliance: firm optimization and welfare analysis

The global shipping industry still frequently faces the problems of low profitability and excessive capacity despite the claimed benefits of capacity sharing between alliance members. This paper investigates capacity sharing within shipping alliance members and its impacts on social welfare under stochastic demand. The dynamic game models constructed in this study examine four scenarios based on whether the alliance members share their surplus capacities and whether their pricing is flexible (their prices are determined before or after the demand realization). The results suggest that flexible pricing always harms the social welfare while capacity sharing improves the social welfare. Without capacity sharing, the government’s subsidy or tax is needed when the carriers’ service substitute degree is low or high, respectively. If the carriers agree with capacity sharing, the tax is needed under flexible pricing while neither subsidy nor tax is needed under the inflexible pricing. This paper provides explanations on the low profits of the shipping lines with their pricing and alliance strategies. Moreover, the policy implications identified in this study can provide support for governments to make their regulation on carriers.

• Record URL:
  • https://doi.org/10.1080/03088839.2022.2120215
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/oclc/2899960
• Supplemental Notes:
  • © 2022 Informa UK Limited, trading as Taylor & Francis Group. Abstract reprinted with permission of Taylor & Francis.
• Authors:
  • Zheng, Shiyuan
  • Ge, Ying-En
  • Fu, Xiaowen
• Publication Date: 2024-2

Language

• English

Media Info

• Media Type: Web
• Features: References;
• Pagination: pp 206-225
• Serial:
  • Maritime Policy & Management
  • Volume: 51
  • Issue Number: 2
  • Publisher: Taylor & Francis
  • ISSN: 0308-8839
  • EISSN: 1464-5254
  • Serial URL: http://www.tandfonline.com/loi/tmpm20

Subject/Index Terms

• TRT Terms: Carriers; Cooperation; Game theory; Pricing; Shipping; Strategic alliances; Vehicle capacity
• Subject Areas: Economics; Freight Transportation; Marine Transportation; Planning and Forecasting;

Filing Info

• Accession Number: 01910667
• Record Type: Publication
• Files: TRIS
• Created Date: Mar 4 2024 9:41AM