Port strategies considering capacity availability and user preference

Whether to cooperate with the neighboring ports is not only an important decision for port operators, but also for the society. This study analyzes whether two ports should cooperate under different capacity availability and user preference. An analytical model is established and a numerical simulation is conducted to examine the impacts of these conditions on ports, users and the society. Ports naturally prefer cooperation as it can generate higher profit, but this preference must be contextualized by service relationships. For complementary ports, cooperation can also generate higher social welfare. For substitutable ports, competition is better and should be promoted, while cooperation can lead to monopoly and social welfare losses. Such losses increase with the level of overcapacity compared with competition. The results underscore a key policy implication: rather than universally promoting cooperation, port strategies should be tailored to service complementarity/substitutability. Specifically, encouraging competition among substitutable ports to safeguard social welfare. This study thus provides a novel framework for aligning port operational decisions with broader societal interests.