Effect of Quality in Port Competition

We study two-port-competition game and its extensions. We show the delicate relationship between start-up quality and equilibrium profile both in one-short game and two-period game. Critical value q∗ and q′ is defined to category different scenario where different equilibrium is achieved. We also study the leader-follower game where one port can move first and interpret the physical meaning of the critical value q∗ from another point of view. The scenario where switching cost exists is also considered and analyzed.