Strategic Interaction amongst Australia’s East Coast Ports
AbstractAustralia’s principal container ports, located in its state capitals, are owned and operated by state authorities that largely return profits from port operations to state governments. Since they govern the volumes of trade in most merchandise, they command immense influence over the openness and flexibility of the national economy. In this study, we estimate the elasticities of substitution between services of ports in Brisbane, Sydney and Melbourne. We also examine the pricing of port services to estimate the extent of their interaction, from which we derive conjectural variations parameters to assess the actual and potential levels of price collusion. The results confirm that there is considerable potential for destructive oligopoly behaviour and that pricing by the apparently isolated Port of Melbourne has been effectively controlled by price-cap regulation. The services of the ports of Sydney and Brisbane are comparatively substitutable, however. Although their regulation appears to be less restrictive, this substitutability appears to result in some level of competition, which aids in the control of pricing.
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Bibliographic InfoPaper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2006-471.
Length: 29 Pages
Date of creation: Aug 2006
Date of revision:
Other versions of this item:
- Flavio M. Menezes & Marcin Pracz & Rod Tyers, 2007. "Strategic Interaction amongst Australia's East Coast Ports," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 40(3), pages 267-278, 09.
- L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-08-27 (All new papers)
- NEP-COM-2007-08-27 (Industrial Competition)
- NEP-CSE-2007-08-27 (Economics of Strategic Management)
- NEP-REG-2007-08-27 (Regulation)
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