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Confidential service contract promotes competition in the European shipping market

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  • Dong-Hua Wang

Abstract

In November 2002, the European Commission granted an individual exemption for the revised trans-atlantic conference agreement (TACA) after it held that provisions in the agreement regarding service contracts and multi-carrier service contracts to be outside the scope of the block exemption. The elimination of conference’s role of enforcing tariff rates should improve slot utilization by promoting efficient pricing. This paper develops a backhaul pricing model to investigate the effect of confidential service contracts on the structure of liner market. In view of the increasing gap between head haul and backhaul freight rates in the European Union after year 2002, a linear joint pricing equation is numerically applied to the homebound and outbound freight rate indices at ports of Antwerp/Hamburg. This study finds that these freight rate indices moved in the opposite directions as it was predicted by the Smith’s condition of joint product, and the European liner market has become competitive after November 2002. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Dong-Hua Wang, 2013. "Confidential service contract promotes competition in the European shipping market," European Journal of Law and Economics, Springer, vol. 36(1), pages 117-129, August.
    • Handle: RePEc:kap:ejlwec:v:36:y:2013:i:1:p:117-129
    DOI: 10.1007/s10657-011-9240-0
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    References listed on IDEAS

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    1. Piet Rietveld & Roberto Roson, 2002. "Direction dependent prices in public transport: A good idea? The back haul pricing problem for a monopolistic public transport firm," Transportation, Springer, vol. 29(4), pages 397-417, November.
    2. Robert B. Ekelund, Jr. & John Thompson, 2001. "Joint Supply and the Development of Economic Theory: A Historical Perspective," History of Political Economy, Duke University Press, vol. 33(3), pages 577-608, Fall.
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    Cited by:

    1. Dominik Boddin & Frank Stähler, 2018. "The Organization of International Trade," CESifo Working Paper Series 7378, CESifo.

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    More about this item

    Keywords

    Transatlantic; Europe/Asia; Revised TACA; China effect; Backhaul; Smith’s condition of joint product; K23; R48;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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