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Exclusive Contracts and Market Power: Evidence from Ocean Shipping

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  • Marín Uribe, Pedro Luis
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    Abstract

    There is a substantial theoretical literature on the potential effects of loyalty contracts, but a relative paucity of empirical work. This Paper employs the event study methodology to examine the effect of exclusionary contracts on firm performance in the ocean shipping industry. Shipping conferences - legal cartels exempt from antitrust laws - offered discounts to customers that patronized exclusively cartel member firms. The usage of these contracts was the subject of an extended legal and political struggle. We test for the impact of the most important events in this conflict on the stock returns of firms in the shipping industry. We find that some of these events resulted in significant changes in the firms’ stock returns. Our evidence suggests that exclusive contracts may have contributed to market power in the shipping industry.

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    Bibliographic Info

    Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2828.

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    Date of creation: Jun 2001
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    Handle: RePEc:cpr:ceprdp:2828

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    Related research

    Keywords: Event Study; Exclusive Contracts; Shipping Conferences;

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    1. Yamey, B S, 1972. "Predatory Price Cutting: Notes and Comments," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 129-42, April.
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    15. Ellison, Sara Fisher & Mullin, Wallace P, 1995. "Economics and Politics: The Case of Sugar Tariff Reform," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 335-66, October.
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    17. 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 1160-79, October.
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