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Port Privatization and Strategic Trade Policy  

Choi, Kangsik (부산대학교 국제전문대학원)
Lim, Seonyoung (부산광역시청 좋은기업유치과)
Publication Information
Journal of Korea Port Economic Association / v.32, no.3, 2016 , pp. 21-33 More about this Journal
Abstract
This paper examines the effect of strategic trade policy on port ownership structures (nationalization or privatization) when two firms compete with each other in reciprocal markets. Furthermore, we analyze firms profits, port charges, ports profits and social welfare when ports are privatized or nationalized under tariff regime and under free trade regime respectively. Thus, we find that (i) under tariff regime, port nationalization is a dominant strategy regardless of transport costs. (ii) the effect of high port charges brings higher port profits than the effect of high trade volume. (iii) irrespective of trade regime, when transport cost is relatively low, port nationalization increases social welfare, while two government prefer free trade agreement to tariff regime when transport cost is sufficiently high regardless of port ownership structures.
Keywords
Port; Nationalization; Privatization; Trade Policy; Port Charge; Social Welfare;
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