Would the shipping alliance promote or discourage green shipping investment?

The international shipping industry has prioritized emissions reduction and invested in green shipping technologies. Shipping alliances have also significantly transformed market structure of container shipping industry, resulting in increased market power for major alliances in recent years. These strategic alliances have substantial implications for the economic incentives to invest in green shipping technologies. This study examines the impact of shipping alliances on green shipping investment by constructing an economic model comprising a port, two shipping lines, and government authority. The analysis demonstrates that shipping alliances promotes green shipping investments, even with increased shipping traffic, leading to an overall reduction in emissions. While these alliances improve shipper surplus, the enhancement of social welfare depends on whether cost savings from reduced emissions outweigh higher investment costs associated with green shipping. Endogenizing emission tax results in lower social-optimal emission tax, which drives more shipping traffic, offsetting emissions reduction from increased green shipping investment.