Unionised dockworkers and port ownership structure in an international oligopoly

In an international duopoly with two markets and two ports, this paper investigates the role of dockworkers unionisation in determining the endogenous choice by governments of port ownership structure. While private ports maximise profits, public ports maximise domestic welfare and face a budget constraint, which is binding when unions are sufficiently wage-oriented and shipping costs are not too high. State-owned ports appear as the most likely equilibrium result although all possible configurations may arise in equilibrium, including an asymmetric structure with a state-owned port and a private port. Country size asymmetry, product differentiation and price competition in product markets favour the rise of a joint public ownership structure of ports. This structure also maximises domestic welfare when unions are wage-oriented. • Governments’ (endogenous) incentives to privatise their ports are analysed in an international duopoly. • Dockworkers unionisation plays a key role in determining port ownership structure. • All configurations may arise in equilibrium, including an asymmetric structure. • State-owned ports appear as the most likely equilibrium result. • Public ownership of ports maximises domestic welfare when unions are wage-oriented.