Pricing and competition in a shipping market with waste shipments and empty container repositioning |
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| Institution: | 1. Department of Industrial Engineering and Logistics Management, The Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong;2. Business School, Newcastle University, 5 Barrack Road, Newcastle upon Tyne NE1 4SE, UK;1. Department of Industrial Engineering & Logistics Management, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong;2. School of Management, University of Liverpool, Chatham Street, Liverpool, L69 7ZH, UK;1. Department of Industrial Engineering, Seoul National University, Seoul 08826, South Korea;2. Institute for Industrial Systems Innovation, Seoul National University, Seoul 08826, South Korea |
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| Abstract: | In this paper, we study a shipping market with carriers providing services between two locations. Shipments are classified into two categories: goods and waste. Trade imbalance allows low-valued waste to be shipped at bargain rates. If imbalance persists, empty containers must be repositioned from a surplus location to a shortage location. Carriers decide prices, which will affect the demand. We build a monopoly and a duopoly model to find the optimal pricing strategy for carriers. We also analyze how the profit of a carrier is affected by price sensitivity, cost structure and competition intensity. |
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