Tacit collusion of pricing strategy game between regional ports: The case of Yangtze River Economic Belt

Abstract

We develop a game model to analyze the tacit collusion between regional ports under three different scenarios. In the first scenario, there is simultaneous pricing game between regional ports; this intends to depict pricing strategy adopted independently. In the second, we consider two competing ports that make sequential pricing decisions. Thirdly, an infinitely repeated game model is then formulated for regional ports to test the stability of Nash equilibrium. Our main finding is that there is a certain degree of tacit collusion of pricing strategy between regional ports in the competitive environment; in particular, the tacit collusion of pricing strategy will gradually stabilize with the increasing number regional ports games. A case study of Yangtze River Economic Belt is provided to illustrate the results.