Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Monday, May 17, 2010

Competition and horizontal integration in maritime freight transport

Posted by D. Daniel Sokol

Rafael Moner, José J. Sempere, Pedro Cantos, and Oscar Álvarez (all Department of Economic Analysis and ERI-CES, University of Valencia) discuss Competition and horizontal integration in maritime freight transport.

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.

http://lawprofessors.typepad.com/antitrustprof_blog/2010/05/competition-and-horizontal-integration-in-maritime-freight-transport.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0134802c3a24970c

Listed below are links to weblogs that reference Competition and horizontal integration in maritime freight transport:

Comments

Post a comment