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Vertical integration and exclusivities in maritime freight transport

  • CANTOS-SANCHEZ, Pedro

    (Department of Economic Analysis and ERI-CES, University of Valencia, Spain)

  • MONER-COLONQUES, Rafael

    (Department of Economic Analysis and ERI-CES, University of Valencia, Spain)

  • SEMPERE-MONERRIS, José J.

    (Department of Economic Analysis and ERI-CES, University of Valencia, Spain and Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

  • ALVAREZ-SANJAIME, Oscar

    (Department of Economic Analysis and ERI, University of Valencia, Spain)

A key recent theme in maritime freight transport is the involvement of shipping lines in terminal management. Such investments are costly but allow liners to provide better service. Most of these new terminals are dedicated terminals but some are non-exclusive and let rivals access them for a fee. In this paper, we show that a shipping line that builds its own terminal finds it strategically profitable i) to continue routing part of its cargo through the open port facilities, and ii) to keep its terminal non-exclusive. In this way, the liner investor pushes part of the rival's freight from the open to the new terminal. Besides, under non-exclusivities, the shipping lines offer a wider variety of services, total freight increases and the resulting equilibrium fares are higher than with a dedicated terminal.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2011015.

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Date of creation: 01 Mar 2011
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Handle: RePEc:cor:louvco:2011015
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