Port Community System Adoption: Game Theoretic Framework for an Emerging Economy Case Study

Abstract

Port community systems (PCS), as platforms for connecting the stakeholders of a port community (PC), build a basis for improving information exchange. These systems support automation and visibility along global supply chains, thereby helping to enhance the overall PC performance in both local and foreign trade activities. However, successful real-world PCS adoption often involves multiple collaborating parties interacting with at least two different types of PC stakeholders. This study assesses the payoff of the alliances between three types of stakeholders to ensure the adoption of a PCS. In order to accomplish the former, it also identifies the different possible collaborations at the inception of a PCS. We use different simulated scenarios to obtain the expected payoff of each stakeholder, in terms of lead time savings achieved, and based on the Shapley value method allocate profits to each coalition. Also, we present a sensitivity analysis to test each coalition with different variation of the market while adopting a PCS. The main result is that profits gained from the adoption of a PCS funded by the port community grand coalition are higher than those from pairs or individual members. Also, the profits gained from the coalition of two cooperative members are higher than any individual effort. Therefore, the stakeholders’ individual incentive to join a PCS coalition should be relatively high coming from a steady coalition.