Game theoretical models of the cooperative carrier behavior

Abstract

This paper presents a multi-level modeling approach which captures the cooperative behavior of carriers in maritime freight transportation networks. Ocean carriers, land carriers and port terminal operators are considered. Port terminal operators are regarded as a special type of carrier for modeling purposes. Ocean carriers are the leaders in a maritime shipping market. Port terminal operators are the followers of ocean carriers as well as the leaders of land carriers. For cooperating ocean and land carriers, compensation principle is used to find the optimal service charge and routing pattern that maximize their total profit, while port terminal operators act competitively. The concept of Stackelberg game is applied to a multi-level game, assuming a single ocean shipping company (leader) through an alliance. Subsequently, the paper considers cooperation between ocean carriers and port terminal operators, while individual carriers within the same group are considered to act competitively. Cooperative games within the same carrier group and between different groups of carriers are examined and compared with competitive games. A numerical example is presented to demonstrate the validity of the developed model.