IDEAS home Printed from https://ideas.repec.org/a/eee/retrec/v32y2011i1p15-24.html
   My bibliography  Save this article

Verifying liner Shipping Alliance’s stability by applying core theory

Author

Listed:
  • Yang, Dong
  • Liu, Miaojia
  • Shi, Xiaoning

Abstract

The core is a vital concept in cooperative game theory and has been widely used in analyzing alliance’s stability. It is especially interesting to apply core theory in liner shipping market due to the latter’s exceptional characteristic of non-homogeneous cost curves as well as divisible and fluctuant demand. Having observed some new phenomena and trends in the industry, this paper studies the economic performance and stability of liner shipping alliance by applying core theory where business cooperation is partly realized by delivering joint-service with mega container ships. To demonstrate the core situation in liner shipping alliance, a cost function is first identified on the basis of two assumptions regarding cooperation: 1) sharing or pooling vessels and 2) deploying mega container ships if needed. Taking cost functions as basis, two conditions of approaching core may be groomed, i.e., collective rationality and individual rationality. The first condition is discussed from the perspective of market, while the second condition is studied within the alliance. Stability of liner shipping alliance is then observed based on these two conditions. An illustrative case study is conducted in order to show some implications and explicitly clarify the theory.

Suggested Citation

  • Yang, Dong & Liu, Miaojia & Shi, Xiaoning, 2011. "Verifying liner Shipping Alliance’s stability by applying core theory," Research in Transportation Economics, Elsevier, vol. 32(1), pages 15-24.
    • Handle: RePEc:eee:retrec:v:32:y:2011:i:1:p:15-24
    DOI: 10.1016/j.retrec.2011.06.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0739885911000126
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.retrec.2011.06.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hercules E Haralambides & Pierre Cariou & Marco Benacchio, 2002. "Costs, Benefits and Pricing of Dedicated Container Terminals," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 4(1), pages 21-34, March.
    2. Imai, Akio & Nishimura, Etsuko & Papadimitriou, Stratos & Liu, Miaojia, 2006. "The economic viability of container mega-ships," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 42(1), pages 21-41, January.
    3. D. K. Ryoo & H. A. Thanopoulou, 1999. "Liner alliances in the globalization era: a strategic tool for Asian container carriers," Maritime Policy & Management, Taylor & Francis Journals, vol. 26(4), pages 349-367, October.
    4. Button, Kenneth & Nijkamp, Peter, 1998. "Economic Stability in Network Industries," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 34(1), pages 13-24, March.
    5. Dong-Wook Song & Photis M. Panayides, 2002. "A conceptual application of cooperative game theory to liner shipping strategic alliances," Maritime Policy & Management, Taylor & Francis Journals, vol. 29(3), pages 285-301.
    6. Button, Kenneth, 2003. "Does the theory of the ‘core’ explain why airlines fail to cover their long-run costs of capital?," Journal of Air Transport Management, Elsevier, vol. 9(1), pages 5-14.
    7. Pirrong, Stephen Craig, 1992. "An Application of Core Theory to the Analysis of Ocean Shipping Markets," Journal of Law and Economics, University of Chicago Press, vol. 35(1), pages 89-131, April.
    8. Sjostrom, William, 1989. "Collusion in Ocean Shipping: A Test of Monopoly and Empty Core Model s," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1160-1179, October.
    9. Jingang Zhao, 2009. "Estimating Merging Costs by Merger Preconditions," Theory and Decision, Springer, vol. 66(4), pages 373-399, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Song, Zhuzhu & Tang, Wansheng & Zhao, Ruiqing, 2021. "Liner alliances with heterogeneous price level and service competition: Partial vs. full," Omega, Elsevier, vol. 103(C).
    2. Guo, Liming & Zheng, Jianfeng & Du, Haoming & Du, Jian & Zhu, Zhihong, 2022. "The berth assignment and allocation problem considering cooperative liner carriers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
    3. Rau, Philipp & Spinler, Stefan, 2017. "Alliance formation in a cooperative container shipping game: Performance of a real options investment approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 155-175.
    4. Daniele Crotti & Claudio Ferrari & Alessio Tei, 2020. "Merger waves and alliance stability in container shipping," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 22(3), pages 446-472, September.
    5. 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.
    6. Evangelos Kounoupas & Angeliki Pardali, 2015. "Adding some context to port marketing: Exploring the content and measurement of market orientation in the port industry," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 65(1-2), pages 3-26, january-m.
    7. Notteboom, Theo E. & Parola, Francesco & Satta, Giovanni & Pallis, Athanasios A., 2017. "The relationship between port choice and terminal involvement of alliance members in container shipping," Journal of Transport Geography, Elsevier, vol. 64(C), pages 158-173.
    8. Jianfeng Zheng & Ziyou Gao & Dong Yang & Zhuo Sun, 2015. "Network Design and Capacity Exchange for Liner Alliances with Fixed and Variable Container Demands," Transportation Science, INFORMS, vol. 49(4), pages 886-899, November.
    9. Chun, So Yeon & Kleywegt, Anton J & Shapiro, Alexander, 2011. "Revenue management in resource exchange seller alliances," MPRA Paper 34657, University Library of Munich, Germany.
    10. So Yeon Chun & Anton J. Kleywegt & Alexander Shapiro, 2017. "When Friends Become Competitors: The Design of Resource Exchange Alliances," Management Science, INFORMS, vol. 63(7), pages 2127-2145, July.
    11. Gang Du & Chuanwang Sun & Jinxian Weng, 2016. "Liner Shipping Fleet Deployment with Sustainable Collaborative Transportation," Sustainability, MDPI, vol. 8(2), pages 1-15, February.
    12. Felipe Lobo Umbelino Souza & Cira Souza Pitombo & Dong Yang, 2021. "Port choice in Brazil: a qualitative research related to in-depth interviews," Journal of Shipping and Trade, Springer, vol. 6(1), pages 1-22, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Notteboom, Theo E. & Parola, Francesco & Satta, Giovanni & Pallis, Athanasios A., 2017. "The relationship between port choice and terminal involvement of alliance members in container shipping," Journal of Transport Geography, Elsevier, vol. 64(C), pages 158-173.
    2. Rau, Philipp & Spinler, Stefan, 2017. "Alliance formation in a cooperative container shipping game: Performance of a real options investment approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 155-175.
    3. Productivity Commission, 2005. "Review of Part X of the Trade Practices Act 1974: International Liner Cargo Shipping," Inquiry Reports, Productivity Commission, Government of Australia, number 32.
    4. Daniele Crotti & Claudio Ferrari & Alessio Tei, 2020. "Merger waves and alliance stability in container shipping," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 22(3), pages 446-472, September.
    5. 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.
    6. Benacchio, Marco & Ferrari, Claudio & Musso, Enrico, 2007. "The liner shipping industry and EU competition rules," Transport Policy, Elsevier, vol. 14(1), pages 1-10, January.
    7. Wu, Wei-Ming, 2009. "An approach for measuring the optimal fleet capacity: Evidence from the container shipping lines in Taiwan," International Journal of Production Economics, Elsevier, vol. 122(1), pages 118-126, November.
    8. Lester G. Telser, 1994. "The Usefulness of Core Theory in Economics," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 151-164, Spring.
    9. Jianfeng Zheng & Ziyou Gao & Dong Yang & Zhuo Sun, 2015. "Network Design and Capacity Exchange for Liner Alliances with Fixed and Variable Container Demands," Transportation Science, INFORMS, vol. 49(4), pages 886-899, November.
    10. Takuma Matsuda & Suguru Otani, 2022. "Unified Container Shipping Industry Data From 1966: Freight Rate, Shipping Quantity, Newbuilding, Secondhand, and Scrap Price," Papers 2211.16292, arXiv.org, revised Apr 2023.
    11. DAVID A. Butz, 1993. "Ocean Shipping Economics: Free Trade And Antitrust Implications," Contemporary Economic Policy, Western Economic Association International, vol. 11(3), pages 69-80, July.
    12. Mike Fusillo, 2013. "The Stability of Market Shares in Liner Shipping," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(1), pages 85-106, February.
    13. Wojahn, Oliver W., 2012. "Why does the airline industry over-invest?," Journal of Air Transport Management, Elsevier, vol. 19(C), pages 1-8.
    14. Margaret C. Levenstein & Valerie Y. Suslow, 2002. "What Determines Cartel Success?," UMASS Amherst Economics Working Papers 2002-01, University of Massachusetts Amherst, Department of Economics.
    15. Schmitt, Nicolas & Weder, Rolf, 1998. "Sunk costs and cartel formation: Theory and application to the dyestuff industry," Journal of Economic Behavior & Organization, Elsevier, vol. 36(2), pages 197-220, August.
    16. Marín Uribe, Pedro Luis, 2001. "Exclusive Contracts and Market Power: Evidence from Ocean Shipping," CEPR Discussion Papers 2828, C.E.P.R. Discussion Papers.
    17. Pierre Cariou & Patrice Guillotreau, 2022. "Capacity management by global shipping alliances: findings from a game experiment," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 24(1), pages 41-66, March.
    18. Acciaro, M. & Haralambides, H., 2008. "Product bundling in global ocean transportation," Econometric Institute Research Papers EI 2008-18, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    19. Waters II, William G., 2007. "Evolution of Railroad Economics," Research in Transportation Economics, Elsevier, vol. 20(1), pages 11-67, January.
    20. Gang Du & Chuanwang Sun & Jinxian Weng, 2016. "Liner Shipping Fleet Deployment with Sustainable Collaborative Transportation," Sustainability, MDPI, vol. 8(2), pages 1-15, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:retrec:v:32:y:2011:i:1:p:15-24. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/620614/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.