Intra-port demand coordination and inter-port competition: Ports’ pricing strategies with congestion concerns

In practice, mix hub ports operate to satisfy both the hinterland demand and transshipment demand, which increases the processing workload, triggers the congestion concern, and hence weakens the port resilience. Note that the port capacity is limited, so decision-makers need to cautiously determine the service prices to coordinate exclusive hinterland demand with competing transshipment demand within the port capacity limit when competing with the other ports. This research formulates a mix hub port's key trade-offs in the pricing strategy choice, that is, whether to charge a uniform service price or two different service prices for the two kinds of demand. The finding of this study shows that the congestion concern (port resilience) plays a key role in determining ports' pricing strategies. And the intensified competition in transshipment demand induces the port to favor the uniform pricing strategy, especially when the hinterland demand potential is sufficiently large. Interestingly, the ports may be trapped in a Prisoner's Dilemma where the differentiated pricing strategy arises as the equilibrium, but they are actually better off under the uniform pricing strategy.