A game theory model is developed to study the overcapacity in shipping from ocean carriers’ strategic behavior with regard to capacity expansion in a competitive market. Capacity expansion is found to be a rational decision in both peak and trough shipping markets. The benefit of expansion is greater when the competitor also expands, but this in turn leads to chronic oversupply and Prisoner’s Dilemma. A numerical simulation is then applied to confirm the analytical results. This research explains the persistent low freight rate in shipping, and points out possible strategies for stakeholders in the shipping industry to maintain a healthy global logistics system in maritime transportation.


    Access

    Check access

    Check availability in my library

    Order at Subito €


    Export, share and cite



    Title :

    Strategic capacity competition and overcapacity in shipping


    Contributors:
    Kou, Ying (author) / Luo, Meifeng (author)

    Published in:

    Publication date :

    2016-05-18


    Size :

    18 pages




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English




    China overcapacity overstated?

    Ponticiel,P. | Automotive engineering | 2004


    Cruising into overcapacity?

    Tema Archive | 1990


    Global Overcapacity Looms

    Benko, Christopher J. | Online Contents | 1997



    Japanese Automakers Overcapacity

    Online Contents | 1995