The role of government policies in promoting sustainable port competition and multimodal transportation: A spatial game theory approach

Abstract

Competition among ports in regions with uneven inland transport infrastructure presents complex challenges for sustainable development. This paper examines two ports, one with multimodal rail-road access and the other with road-only access, competing over a shared hinterland of spatially dispersed customers using a spatial Stackelberg game. A government, acting as the Stackelberg leader, implements Equity Initiative Programs (EIPs) such as subsidies, emission taxes, and freight discounts, aiming to achieve objectives like economic efficiency, social welfare, and environmental sustainability. Notably, emission taxes alone have limited environmental impact without complementary rail investments. This model is illustrated through the case of Shahid Bahonar and Chabahar ports in Iran. Results reveal that multimodal transportation infrastructure offers a competitive advantage and that integrated EIPs can mitigate infrastructural deficiencies. Multimodal ports consistently capture larger market shares, especially under environmental policies that simultaneously enhance employment opportunities and ecological performance. Employment generation is notably higher at multimodal ports, particularly for high-value cargo. These findings highlight the importance of comprehensive, integrated policy frameworks that promote fair and sustainable port development, particularly in regions with inadequate infrastructure.¹