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http://hdl.handle.net/10397/94581
Title: | Investment competition on dedicated terminals under demand ambiguity | Authors: | Zheng, S Jiang, C Fu, X |
Issue Date: | Jun-2021 | Source: | Transportation research. Part E, Logistics and transportation review, June 2021, v. 150, 102306 | Abstract: | This paper establishes real option game models to investigate two competing shipping lines’ timing decisions on their respective dedicated terminal (DT) investments in the presence of demand ambiguity. In addition, we compare the shipping lines’ DT investment timing with the choice under the social optimum, and discuss the subsidy policies with which a government can regulate the shipping lines’ investment timing. The results indicate that (1) if the shipping lines are symmetric (i.e., have the same DT capacities, investment costs, and operation costs while having symmetric demands), their DT investment game could reach sequential investment equilibrium, where the leader makes a preemptive investment while the follower's investment is delayed compared to the case without ambiguity; (2) when the government has complete information on the shipping lines’ ambiguity level, the regulation rule exhibits a stepwise structure where the social optimum (or the mixed timing between the social optimum and the shipping lines’ optimum, respectively) is implemented, if the social optimal timing is later (or earlier, respectively) than the shipping lines’ break-even timing; (3) when the government has incomplete information on the shipping lines’ ambiguity level, the stepwise structure still holds but the shipping lines can obtain extra subsidies due to their information advantages compared to the complete information case; and (4) compared to the complete information case, the incomplete information may promote (or delay, respectively) the regulated DT investment timing, if the increasing ambiguity has positive (or negative, respectively) effects on the shipping lines’ marginal option values. | Keywords: | Dedicated terminal Investment competition Knightian uncertainty Multiple-priors expected utility (MEU) Real option game |
Publisher: | Pergamon Press | Journal: | Transportation research. Part E, Logistics and transportation review | ISSN: | 1366-5545 | EISSN: | 1878-5794 | DOI: | 10.1016/j.tre.2021.102306 | Rights: | © 2021 Elsevier Ltd. All rights reserved. © 2021. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/. The following publication Zheng, S., Jiang, C., & Fu, X. (2021). Investment competition on dedicated terminals under demand ambiguity. Transportation Research Part E: Logistics and Transportation Review, 150, 102306 is available at https://dx.doi.org/10.1016/j.tre.2021.102306. |
Appears in Collections: | Journal/Magazine Article |
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Fu_Investment_Competition_Dedicated.pdf | Pre-Published version | 1.24 MB | Adobe PDF | View/Open |
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