Prioritization Competition in a Three‐Sided Shipping Market: A Tri‐Level Game‐Theoretic Approach

ABSTRACT With the rapid growth of trade and port services, competition among ports has intensified, leading to strategic measures such as berthing priority. This paper examines the impact of prioritization on port congestion, stakeholder competition, and social welfare in duopoly and fragmented carrier markets. Using a tri‐level game‐theoretical model, we analyze the equilibrium in a port‐carrier‐cargo‐owner system, focusing on the interactions between decisions of different stakeholders. Key findings include: (1) In a duopoly market, equilibria either show no priority or both ports prioritizing the smaller carrier, while in a fragmented market, the Nash equilibrium converges to not providing priority; (2) Priority solidifies carriers' competitive landscape, prompting fleet adjustments that improve efficiency and thus reducing congestion; (3) While priority can reduce congestion, it may also disadvantage the more competitive port and raise inter‐modal transportation costs for some cargo owners; (4) Priority brings benefits for ports in markets with stronger carrier market power but offers little advantage in perfectly competitive markets, aligning with the fact that prioritization is mainly observed in container markets.