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Market Power and Collusion in the Ocean Shipping Industry: Is a Bigger Cartel a Better Cartel?

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  • Clyde, Paul S
  • Reitzes, James D

Abstract

The regulatory structure of the ocean shipping industry allows carriers to enter into joint pricing agreements (conference agreements) that are free from antitrust scrutiny and requires freight rates to be published and policed by a government agency. The authors test whether this regulatory structure leads to the exercise of market power and identify whether that market power resides with conferences themselves or requires the participation of carriers outside the conference. The results suggest that liner conferences are not particularly effective cartels although some market power may exist in ocean shipping. Market concentration may be a contributing factor to this market power. Copyright 1998 by Oxford University Press.

Suggested Citation

  • Clyde, Paul S & Reitzes, James D, 1998. "Market Power and Collusion in the Ocean Shipping Industry: Is a Bigger Cartel a Better Cartel?," Economic Inquiry, Western Economic Association International, vol. 36(2), pages 292-304, April.
    • Handle: RePEc:oup:ecinqu:v:36:y:1998:i:2:p:292-304
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    Cited by:

    1. Goh, Shao Hung & Chan, Yuxian, 2016. "Operational shadow pricing in back haul container shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 92(C), pages 3-15.
    2. Suguru Otani, 2024. "Industry Dynamics with Cartels: The Case of the Container Shipping Industry," Discussion Paper Series DP2024-28, Research Institute for Economics & Business Administration, Kobe University.
    3. Martin, Stephen, 2006. "Competition policy, collusion, and tacit collusion," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1299-1332, November.
    4. Fung, Michael K. & Cheng, Leonard K. & Qiu, Larry D., 2003. "The impact of terminal handling charges on overall shipping charges: an empirical study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(8), pages 703-716, October.
    5. Michael Fung, 2014. "Ocean Carriers’ Collusion Under Antitrust Immunity: Evidence of Asymmetric Pass-Through," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(1), pages 59-77, August.
    6. Chen, Gang & Rytter, Niels G.M. & Jiang, Liping & Nielsen, Peter & Jensen, Lars, 2017. "Pre-announcements of price increase intentions in liner shipping spot markets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 109-125.
    7. Suguru Otani, 2024. "Industry Dynamics with Cartels: The Case of the Container Shipping Industry," Papers 2407.15147, arXiv.org.
    8. Cullinane, Kevin, 2004. "7. The Container Shipping Industry And The Impact Of China'S Accession To The Wto," Research in Transportation Economics, Elsevier, vol. 12(1), pages 221-245, January.
    9. James Reitzes & Kelli Sheran, 2002. "Rolling Seas in Liner Shipping," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(1), pages 51-59, February.
    10. Suguru Otani & Takuma Matsuda, 2023. "Unified Merger List in the Container Shipping Industry from 1966: A Structural Estimation of the Transition of Importance of a Firm's Age, Tonnage Capacity, and Geographical Proximity on Merger Decisi," Papers 2310.09938, arXiv.org, revised Nov 2023.
    11. Stephen Martin, 2012. "Market Structure and Market Performance," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(2), pages 87-108, March.
    12. Hayden G. Stewart & Fred S. Inaba, 2003. "Ocean liner shipping: Organizational and contractual response by agribusiness shippers to regulatory change," Agribusiness, John Wiley & Sons, Ltd., vol. 19(4), pages 459-472.
    13. Okereke, Chukwumerije & McDaniels, Devin, 2012. "To what extent are EU steel companies susceptible to competitive loss due to climate policy?," Energy Policy, Elsevier, vol. 46(C), pages 203-215.
    14. Jimenez, Manuel, 2020. "Trade Costs and Mark-Ups in Maritime Shipping," Conference papers 333182, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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