A game theory competition analysis of quadropolistic liner container shipping market

Aymelek, Murat and Boulougouris, Evangelos and Turan, Osman (2016) A game theory competition analysis of quadropolistic liner container shipping market. In: Proceedings of International Association of Maritime Economists (IAME) 2016 Conference. International Association of Maritime Economists, Germany.

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    Abstract

    This paper demonstrates a non-cooperative four rational player’s static game framework to analyse the shipping alliance competition on a particular Far East-Northern Europe liner shipping service loop. The complete-perfect information case of the players is taken into account and the Cournot-Nash equilibrium pure strategy solution concept is utilised. The approach developed in this study focuses on the current liner shipping alliance structure and assumes the long term stability of the current alliances. The research steps are mathematically integrated to different methodological outcomes and numerically tested in the given case study. The results suggested that, in a two year period, additional ship capacity deployment would reduce the competitiveness of the alliances. It is proposed that outcomes of this research will provide significant theoretical contribution to the existing literature and will generate a robust tactical decision support rationale regarding to the capacity deployment problem of the liner container shipping industry.