Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/62436
Title: Strategic capacity competition and overcapacity in shipping
Authors: Kou, Y
Luo, M 
Keywords: Normal form game
Capacity competition
Prisoner's Dilemma
Over-supply
Modeling
Issue Date: 2016
Publisher: Routledge, Taylor & Francis Group
Source: Maritime policy and management, 2016, v. 43, no. 4, p. 389-406 How to cite?
Journal: Maritime policy and management 
Abstract: 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.
URI: http://hdl.handle.net/10397/62436
ISSN: 0308-8839
EISSN: 1464-5254
DOI: 10.1080/03088839.2015.1105395
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