Competition and horizontal integration in maritime freight transport
AbstractThis 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
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Bibliographic InfoPaper provided by University of Valencia, ERI-CES in its series Discussion Papers in Economic Behaviour with number 0710.
Date of creation: Jun 2010
Date of revision:
freight transport; shipping lines; horizontal integration;
Other versions of this item:
- Rafael Moner & José J. Sempere & Pedro Cantos & Oscar Álvarez, 2010. "Competition and horizontal integration in maritime freight transport," Working Papers 2010-13, FEDEA.
- NEP-ALL-2010-06-26 (All new papers)
- NEP-COM-2010-06-26 (Industrial Competition)
- NEP-CSE-2010-06-26 (Economics of Strategic Management)
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