Industry Dynamics with Cartels: The Case of the Container Shipping Industry

Suguru Otani

Papers from arXiv.org

Abstract: I investigate how explicit cartels, known as ``shipping conferences", in a global container shipping market facilitated the formation of one of the largest globally integrated markets through entry, exit, and shipbuilding investment of shipping firms. Using a novel data, I develop and construct a structural model and find that the cartels shifted shipping prices by 20-50\% and encouraged firms' entry and investment. In the counterfactual, I find that cartels would increase producer surplus while slightly decreasing consumer surplus, then may increase social welfare by encouraging firms' entry and shipbuilding investment. This would validate industry policies controlling prices and quantities in the early stage of the new industry, which may not be always harmful. Investigating hypothetical allocation rules supporting large or small firms, I find that the actual rule based on tonnage shares is the best to maximize social welfare.

Date: 2024-07
New Economics Papers: this item is included in nep-com, nep-ind and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2407.15147 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2407.15147

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().