Environmental corporate social responsibility and port privatization in a mixed port supply chain competition

Abstract

This study examines environmental corporate social responsibility (ECSR) in a mixed port supply chain competition, wherein shipping lines, served by public or private ports, offer differentiated services. We explore the strategic interaction between the shipping lines' ECSR under freight rate competition and the government's port privatization policy. We find that adopting ECSR benefits shipping lines served by public ports but harms those served by private ports. This reduces port industry profitability while enhancing environmental and social performance. We also demonstrate that port privatization consistently decreases the ECSR levels of shipping lines served by privatized ports but increases them for those not served by such ports. The overall welfare effect crucially depends on the degree of substitutability between shipping services. Our findings suggest that when shipping services are highly substitutable, privatizing a public port can yield environmentally and socially desirable outcomes, though it may adversely affect the shipping industry and shippers under strategic ECSR conditions.