Resilience solution to solve prisoner's dilemma in port shore power usage: The value of government subsidies on port

Abstract

As environmental pollution increases and pollutants emitted by ships pose a threat to the environment and health, port shore power has become an effective means of reducing pollution from ships. However, shipping companies are affected by fuel prices and may ignore environmental issues and jeopardize social welfare in pursuit of their own interests. Therefore, government intervention is particularly important, especially through subsidies to solve the conflict between competition among shipping companies and environmental pollution. This study develops a three-tier supply chain model incorporating governmental authorities, port operators, and dual shipping companies to examine shore power adoption strategies. Through Nash equilibrium analysis, we investigate the efficiency of shore power utilization under both subsidized and non-subsidized scenarios in order to find the resilience solution for the relevant stakeholders. The findings reveal that in the absence of government intervention, shipping companies' equilibrium strategies are primarily determined by the relative costs of conventional fuel and shore power, leading to potential Prisoner's Dilemma situations. The introduction of government subsidies enhances the likelihood of achieving stable equilibrium for both shipping companies while mitigating the Prisoner's Dilemma effect. The study provides references of resilience solution for related fields and policy recommendations for parties in the port and shipping supply chain.