Benefit of Competition and Cooperation Between Ports

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Benefit of Competition and Cooperation between Ports Prevention of market power of port service providers Port competition in China and Hongkong prevents the aspect of monopoly among the providers of services. At the port transport industry, there exist economic rents which a paid by all transport providers and customers. The economic rents are provided by seaport and airports in China. In case of limited competition the economic rent becomes substantial. The ports which provide the same product and service compete with each other, and they provide better services since monopoly is not practiced (Chlomoundis 2002). The economic rent accrues among many participators in the industry including port service providers, employee, local and national government and the consumers of the services. When monopoly is practiced ports have the potential to discriminate in respect of demand elasticity, and the port service users experiences abnormal prices. Competition between ports reduces the aspect of monopoly, because the ports have different economic rents. The service seekers compare the level of economic rent between different ports and prefer to use the port with littlie economic rent followed by the second and the rest respectively. This makes the ports to regulate the prices and have fixed prices on the service in order to attract more customers (Langen 2004). When there many entrants in the market the ports does not have market power because of the fear of competition.
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