A Game-Theoretic Analysis of Shore-Side Electricity Subsidy Optimization Under Port Competition and Cooperation

Shore-side electricity (SSE) is an effective approach to reduce the emissions of greenhouse gas (GHG) and air pollutants from at-berth ships. Governments are using subsidies to incentivize ports and vessels to use SSE. However, its utilization remains limited. This paper targets the problem of government subsidy optimization considering games between the government and ports. A two-stage tripartite game model and four subsidy scenarios are proposed to investigate the interactions between the government and two ports. The results show that the choice of subsidy recipients does not affect the overall effectiveness of the subsidies. The optimal unit subsidy should be linked to the environmental benefits of GHG reduction, electricity prices, and fuel oil prices. Port competition can further enhance SSE utilization and environmental performance. Thus, policies should encourage such competition. Furthermore, analysis indicates that the cost of enhancing SSE quality is a key factor affecting SSE performance. Based on the analytical findings, this study offers policy recommendations for designing effective subsidy schemes.