Competitive strategy of port regionalization based on Hotelling model

Under the context of port regionalization, introducing externality and compatibility to utility function of the shipper, the linear extensive Hotelling model is established in order to research competitive strategy of port regionalization according to selecting location, charging and service quality of the port. The results shows that: if the two ports in the procession of regionalization implement non-cooperative game strategy profile, there is excessive competition when the two ports maximize its own profit to select optimal location of port area, moreover the best port charge is in proportion to port service quality. When cooperative game strategy profile is implemented, the location of the new port area will tend to disperse in order to adopt differential strategy, the difference between the optimal port charges is proportional to the intensity of network externality and the difference between the best service qualities, however is inversely proportional to the extent of compatibility and the difference between the distances to the port of destination. Furthermore, the optimal overall service quality of port regionalization depends on the network externality, compatibility and land´s unit transportation cost, with no respect to the distance to the port of destination, the differentiation of the optimal service quality in positive correlation with the difference between the distances to the port of destination.