Countries throughout the world, and especially within Asia, are investing heavily in container port infrastructure in the hopes of capturing a larger share of global shipping activity for their economies. Many existing ports are emphasizing developing the capacity to serve as a hub port, building deepwater berths with large terminals to facilitate transfer of containers from feeder ships to mother ships for intercontinental transport. We develop a game-theoretic best response framework for understanding how competitor ports will respond to development at a focus port, and whether the focus port will be able to capture or defend market share by building additional capacity. We apply this model to investment and competition currently occurring between the ports of Busan and Shanghai.

Numerous studies have analyzed the productivity, efficiency, and competitiveness of ports. However, empirical studies on the environmental efficiency of ports have not yet been carried out, since all previous studies have not considered the undesirable outputs that ports generate, for instance, CO₂ emissions. To fill the gap in the literature, the objective of this study is to estimate environmental efficiency of ports. More specifically, this paper intends to analyze environmental efficiency of ports in Korea and to estimate the potential CO₂ emission reduction by ports in the country. The main methodology is a Slacks-Based Measure Data Envelopment Analysis (SBM-DEA) model. Data, on labor, capital, and energy used as major inputs of the port sector; on cargo tonnage and vessel tonnage handled as desirable outputs; and on CO₂ emissions as an undesirable output, were collected and estimated. The SBM-DEA model was able to provide us with a more comprehensive efficiency of combining economic performance and environmental performance and was also able to capture slack values of input excess and undesirable output excess (CO₂) as well as desirable output shortage. Using the model and the data, it was found that Korean ports are deemed to be economically inefficient, but environmentally efficient when considering economic and environmental performances simultaneously.