Spatial non-price competition in port infrastructure services

This study analyses the possible existence of spatial non-price competition in the port industry. We propose a dynamic two-stage model that allows: (1) to estimate the sensitivity of generation and diversion of traffic caused by port capacity expansions; (2) to quantify the degree of capacity competition; (3) to simulate a hypothetical scenario of cooperation agreements among different port authorities. The econometric specification is based on a structural model of demand, cost and market equilibrium. The empirical results suggest that non-price competition exists in port infrastructure services. Furthermore, using a simulation analysis, we show that incentives to invest in port capacity decrease under a cooperative setting.