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The global shipping industry still frequently faces the problems of low profitability and excessive capacity despite the claimed benefits of capacity sharing between alliance members. This paper investigates capacity sharing within shipping alliance members and its impacts on social welfare under stochastic demand. The dynamic game models constructed in this study examine four scenarios based on whether the alliance members share their surplus capacities and whether their pricing is flexible (their prices are determined before or after the demand realization). The results suggest that flexible pricing always harms the social welfare while capacity sharing improves the social welfare. Without capacity sharing, the government's subsidy or tax is needed when the carriers' service substitute degree is low or high, respectively. If the carriers agree with capacity sharing, the tax is needed under flexible pricing while neither subsidy nor tax is needed under the inflexible pricing. This paper provides explanations on the low profits of the shipping lines with their pricing and alliance strategies. Moreover, the policy implications identified in this study can provide support for governments to make their regulation on carriers. [ABSTRACT FROM AUTHOR]

The Northern Sea Route (NSR) has tremendous potential for ocean shipping between Europe and Asia due to the savings from shorter transit time and distance. However, the Arctic area is environmentally vulnerable and thus there is a trade-off between NSR’s impacts on environment vs. its economic benefits, especially when compared with the traditional route, such as through the Suez Canal Route (SCR). This study estimates the market shares of different transport modes and alternative shipping routes for the container transport market between Europe and Asia, and the resulting environmental costs. Our result suggests that NSR can be a viable option under the status quo. However, its environmental costs tend to be higher than SCR due to small ship size and low load factor in the present, thus the development of NSR would lead to worse environment outcomes. If these issues can be resolved, NSR can benefit from lower operational and environmental costs, which will lead to higher market share and social welfare. Otherwise, increased use of NSR may lead to higher total environment costs than the status quo. [ABSTRACT FROM AUTHOR]

Rail and transit-oriented-development (TOD) projects are simultaneously optimized in this paper, with special consideration given to yearly variation and spatial and temporal correlation of population densities. In the proposed model, the objective is to minimize the investment risk of integrated rail and TOD projects with a given required expected return on investment. The investment risk is optimized based on closed-form solutions of the design variables, including rail line length, the number of TOD projects, and the number of housing units in each TOD project. The closed-form solutions are given explicitly under the assumption of social welfare maximization. It is found that underestimation exists for rail and TOD projects without consideration of the correlation of spatial and temporal population densities. TOD projects can greatly improve the return on investment of the rail operator. A numerical example is also presented. [ABSTRACT FROM AUTHOR]

• This paper develops an integrated economic model to examine two competing ports' adaptation to climate-change disasters, when they have asymmetric information. • Under publicity policy, the better-informed port initiates a "signaling game". • Under confidentiality policy, both ports make their decisions simultaneously. • The government needs to promote inter-port competition (when they have different information structure) if it decides to publicize port adaptation information. • A joint implementation of the publicity and subsidy policies may result in excessive adaptation investment, leading to social welfare loss. This paper develops an integrated economic model to examine two competing ports' investment in adaptation to climate-change disasters. The ports have asymmetric information on the actual disaster damage. In deciding on adaptation investment, the "leader" port is a better-informed first mover and the "follower" port is a less-informed follower. The government is able to acquire and verify port adaptation information and chooses whether to publicize it (publicity policy) or keep it confidential (confidentiality policy). If the information is publicized, the leader port initiates a signaling game in which it makes a decision first, and the follower acts after observing the leader's decision. Under the confidentiality policy, both ports make their decisions simultaneously. Our analysis shows the following. 1) Under the publicity policy, the leader port does not adopt a pooling strategy; rather, it determines its adaptation and output based on true information on disaster damage (i.e., it implements a separating equilibrium). 2) The publicity policy has two effects: it increases the leader's throughput while decreasing the follower's throughput (i.e., the throughput effect), and it helps rationalize the follower's adaptation investment by making more up-to-date disaster information available (i.e., the adaptation investment effect). 3) When the degree of inter-port competition is high, the publicity policy improves social welfare by increasing the total throughput of the two ports (i.e., an overall positive throughput effect) and rationalizes the follower's adaptation investment (i.e., a positive adaptation investment effect). Otherwise, it reduces the total throughput of the ports (i.e., an overall negative throughput effect). This negative throughput effect may outweigh the positive adaptation investment effect, thereby reducing social welfare. These analytical results suggest that the government needs to promote inter-port competition if it decides to publicize port adaptation information. Finally, we find that the joint implementation of publicity and subsidy policies could result in excessive adaptation investment, leading to social welfare loss. Our study illustrates the important effects of information asymmetry on adaptation investment and has policy implications in the presence of port competition and government subsidy. [ABSTRACT FROM AUTHOR]