Verifying liner Shipping Alliance's stability by applying core theory

Dong Yang, Miaojia Liu, Xiaoning Shi

Research output: Journal article publicationJournal articleAcademic researchpeer-review

32 Citations (Scopus)

Abstract

The core is a vital concept in cooperative game theory and has been widely used in analyzing alliance's stability. It is especially interesting to apply core theory in liner shipping market due to the latter's exceptional characteristic of non-homogeneous cost curves as well as divisible and fluctuant demand. Having observed some new phenomena and trends in the industry, this paper studies the economic performance and stability of liner shipping alliance by applying core theory where business cooperation is partly realized by delivering joint-service with mega container ships. To demonstrate the core situation in liner shipping alliance, a cost function is first identified on the basis of two assumptions regarding cooperation: 1) sharing or pooling vessels and 2) deploying mega container ships if needed. Taking cost functions as basis, two conditions of approaching core may be groomed, i.e., collective rationality and individual rationality. The first condition is discussed from the perspective of market, while the second condition is studied within the alliance. Stability of liner shipping alliance is then observed based on these two conditions. An illustrative case study is conducted in order to show some implications and explicitly clarify the theory.
Original languageEnglish
Pages (from-to)15-24
Number of pages10
JournalResearch in Transportation Economics
Volume32
Issue number1
DOIs
Publication statusPublished - 16 Aug 2011
Externally publishedYes

Keywords

  • Core theory
  • Cost function
  • Liner shipping alliance
  • Mega container ship
  • Stability

ASJC Scopus subject areas

  • Transportation
  • Economics, Econometrics and Finance (miscellaneous)

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