Market Power in the Philippine Domestic Shipping Industry

Kris Francisco and Michael Abrigo

No DP 2023-44, Discussion Papers from Philippine Institute for Development Studies

Abstract: High market concentration in the Philippine domestic shipping industry has always been a subject of concern among policymakers and researchers. While many reforms aimed at improving the level of competition in the industry have been implemented since the 1990s, studies show that domestic shipping operations remain in the hands of a few players, especially at the route level. This study aims to enrich the discussion by providing an alternative measure of market power in domestic shipping through the estimation of markups –a useful indicator of how firms can price their goods or services above marginal cost. Estimates confirm the exercise of market power in the domestic shipping industry, as evidenced by high markups. It was also found that the markup on freight is relatively larger than the markups on passenger services. Additional analysis confirms that having a high market share influences high markups significantly. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph.

Keywords: market power; markups; domestic shipping (search for similar items in EconPapers)
Pages: 16
Date: 2023
New Economics Papers: this item is included in nep-com, nep-sea and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:phd:dpaper:dp_2023-44

DOI: 10.62986/dp2023.44

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