The port competitive strategies research based on hotelling model

The strategies of two duopoly ports which are characterized by different quality, network externality coefficient, compatibility, switch costs were studied after Hotelling model with Vertical product differentiation (port logistic service differentiation) and quadratic transport costs was introduced. For two ports, their locations and competitive in price were chose simultaneously. Equilibrium market strategies of duopoly ports with Horizontal and Vertical product differentiation are obtained. Under the assumption that duopoly ports would choose their maximal horizontal product differentiation (maximal location differentiation)the influence of network externality coefficient, compatibility coefficient and switch costs on the duopoly' competition equilibrium was analyzed. According to the results, in competitive environment, port should concern its own price advantage change, which will raise with the increase of its own network externality coefficient, compatibility, switch costs respectively and which will reduce with the increase of competitor's network externality coefficient, compatibility, switch costs respectively.