A THEORETICAL FRAMEWORK FOR THE EVALUATION OF COMPETITION BETWEEN CONTAINER TERMINAL OPERATORS

Abstract

This paper presents a conceptual framework for analyzing the outcomes of potential competitive strategies and their expected payoffs for container terminal operators in the container handling industry. The framework is based on the integration of Bowley's linear model of aggregate demand of product differentiation with Porter's "Diamond" model. It focuses on the number of containers handled, prices charged, and profits earned to analyze a variety of strategies that could be employed by container terminal operators to enhance their competitive position. The findings suggest that strategies to build complementary relationships and stimulate greater demand are more desirable than alternatives because they generate benefits that accrue to the entire container port cluster. Conversely, strategies that are intended to raise entry barriers, employ strategic pricing mechanisms, and/or involve collusion are found to lead to the formation of insular clusters and retard competitive advantage in the long-run.