Pricing and Subsidy Models for Transshipment Sustainability in the Three Gorges Dam Region of China

Abstract

Congestion before the Three Gorges Dam has been an obstacle to the sustainable development of the Yangtze River. Water–land transshipment can be a better way to alleviate congestion. Consequently, the government started to offer subsidies to evacuate ships’ traffic flow through transshipment despite that it increases environmental pollution. In this paper, we analyze the effects of subsidies on carriers’ adoption behavioral strategies, congestion and transshipment on the environment, and subsidies on pricing considering environmental emissions. Two different models are constructed, and a simulation analysis is carried out with different scenarios by varying the values of different parameters. The results show that subsidies can affect carriers’ behavioral strategies. Both lockage and transshipment modes can increase environmental emissions. Pricing under the subsidy scenario can be more competitive with profit maximization. The results offer important implications to policymakers, carriers, shippers.