Preliminary Insights into Optimal Pricing and Space Allocation at Intermodal Terminals with Elastic Arrivals and Capacity Constraint

Abstract

This paper discusses derivations, and implications of, formulae to compute optimal space allocation and pricing for storage at container terminals. The case discussed in the paper considers elastic arrivals and container dwelling times, which is a more general version of the case considered by the authors in their first publication on the subject. In general terms, the optimal prices have three components that capture the different facets of the process. The first element captures the combined effect of willingness to pay and marginal cost, i.e., the classic solution after Ramsey (1927). The second element represents the contribution of the capacity constraint, i.e., the element introduced in Holguin-Veras and Jara-Diaz (1999). The third element captures the role of elastic arrivals and represents the main contribution of this paper. The role of the cost structure is also analyzed.