LAUSR

This study considers two asymmetric ports under international competition in which each country has a hub port and a private manufacturer and investigates strategic interactions between port privatization and emission tax policies. We emphasize the key role of the relative market size between the two countries and show that in a privatization choice game, port privatization is a dominant strategy in a larger country, but it will be chosen by a smaller country only if its relative market size is not so small. We also show that the coordination of global emission taxes before privatization choices can induce the equilibrium of the game to be globally optimal when the emission tax is relatively high. This finding provides an important policy implication on the climate change that coordinated global environmental policy is imperatively required in the port privatization policy.