Application of game theory to analyze the competition and cooperation scenarios among container terminals in Northern Vietnam

Abstract

Northern Vietnam plays an important role in Vietnam's national economy. In recent years, the sea-port industry in the area has witnessed an impressive development and fierce competition especially among local container terminals. Under the pressure of competition, local container ports are competing through attractive handling charges. The paper applies a Bertrand-Nash game model to estimate the equilibrium handling charges and equilibrium market share of each container terminal in the area. The game can be divided into non-cooperative game and cooperative game. Under the cooperative game, three different scenarios are considered. The game results will verify the implication of price competition among local container terminals and present the outcome of each coalitional scenario for further discussion.