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A Theoretical Analysis of Liner Shipping Conferences and Strategic Alliances

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  • Masayuki Doi
  • Hiroshi Ohta
  • Hidekazu Itoh

Abstract

We analyze the economic impacts of industrial organizational struggles on the international liner shipping market. Operating ratios of different markets are discussed by incorporating rate, service level, and other variables into a standard microeconomic model. If two different carriers agree on a shipping conference price and/or share a strategic alliance service level, and maximize consolidated profit, a member carrier finds it easier to make its operation profitable than the individual profit optimization case; other carriers are worse off in becoming profitable. If the carriers face inelastic demand, the price continues rising until demand becomes elastic enough for the equilibrium to be relevant. The conference is expected to play a coordination role so that the market does not become unsustainable in the adjustment process to reach equilibrium.

Suggested Citation

  • Masayuki Doi & Hiroshi Ohta & Hidekazu Itoh, 2000. "A Theoretical Analysis of Liner Shipping Conferences and Strategic Alliances," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 12(3), pages 228-249, November.
  • Handle: RePEc:bla:revurb:v:12:y:2000:i:3:p:228-249
    DOI: 10.1111/j.1467-940X.2000.00079.x
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    Cited by:

    1. 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.
    2. Mohammad Ghorbani & Michele Acciaro & Sandra Transchel & Pierre Cariou, 2022. "Strategic alliances in container shipping: A review of the literature and future research agenda," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 24(2), pages 439-465, June.
    3. Giulia Arduino & David G. Cardillo Murillo, 2010. "Dynamic role of actors in freight transport and logistics," Working Papers 10_5, SIET Società Italiana di Economia dei Trasporti e della Logistica, revised 2010.
    4. Giulia Arduino & David G. Cardillo Murillo, 2010. "Dynamic role of actors in freight transport and logistics," Working Papers 1005, SIET Società Italiana di Economia dei Trasporti e della Logistica, revised 2010.

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