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Private operation of port facilities is becoming increasingly common worldwide. We investigate the e¤ect of port privatization in a setting with two ports located in di¤erent countries, each serving their home market but also competing for the transshipment tra¢ c from a third region. Each government chooses whether to privatize its port or to keep port operations public. We show that there exist equilibria in which the two governments choose privatization and the national welfare of each port country is higher relative to a situation where ports are public. This is because privatization is a commitment to increase charges relative to public port charges, which allows for a better exploitation of the third region. For some parameter regions, port countries non-cooperatively choose public port operations, while they would be better o¤ if both ports were private. However, customers of the third region are always better o¤ if port operations are public. We further show that the port country with the smaller home market has a relatively strong incentive to choose private port operation.

It is often argued in the US that HOV (high occupancy vehicle) lanes are wasteful and should be converted to HOT (high occupancy vehicles and toll lanes). In this paper, we construct a simple model of commuters using a highway with multiple lanes, in which commuters are heterogeneous in their carpool organization costs. We …rst look at the HOV lanes and investigate under what conditions introducing HOV lanes is socially bene…cial. Then we examine whether converting HOV lanes to HOT lanes improves the e¢ ciency of road use. It is shown that the result depends on functional form and parameter values. We also discuss the e¤ect of alternative policies: simple congestion pricing without lane division; and congestion pricing with HOV lanes. The analysis using speci…c functional form is presented to explicitly obtain the conditions determining the rankings of HOV, HOT, and other policies based on aggregate social cost.

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