Competition and horizontal integration in maritime freight transport

Pedro Cantos Sanchez (pedro.cantos@uv.es), Rafael Moner-Colonques (rafael.moner@uv.es), José Sempere-Monerris and Óscar Álvarez San-Jaime (oscar.alvarez@uv.es)
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Pedro Cantos Sanchez: ERI-CES
Rafael Moner-Colonques: ERI-CES
Authors registered in the RePEc Author Service: Pedro Cantos-Sánchez

No 710, Discussion Papers in Economic Behaviour from University of Valencia, ERI-CES

Abstract: This paper develops a theoretical model for freight transport characterized by competition between means of transport (the road and maritime sectors), where modes are perceived as differentiated products. Competitive behavior is assumed in the road freight sector, and there are constant returns to scale. In contrast, the freight maritime sector is characterized by oligopolistic behavior, where shipping lines enjoy economies of scale. The market equilibrium where the shipping lines behave as profit maximizers, provides a first approximation to the determinants of market shares, profits, and user welfare. We then characterize the equilibrium when horizontal integration of shipping lines occurs, with and without further economies of scale. An empirical application to the routes Valencia-Antwerp and Valencia-Genoa uncovers that the joint profit of the merged firms and social welfare always increase. However, user surplus only increases when economies of scale are significantly exploited

Keywords: freight transport; shipping lines; horizontal integration (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-com and nep-cse
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Competition and horizontal integration in maritime freight transport (2013)
Working Paper: Competition and horizontal integration in maritime freight transport (2013)
Working Paper: Competition and horizontal integration in maritime freight transport (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:dbe:wpaper:0710

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