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Competition and horizontal integration in maritime freight transport

Author

Listed:
  • Pedro Cantos Sanchez

    () (ERI-CES)

  • Rafael Moner-Colonques

    () (ERI-CES)

  • Jose Sempere-Monerris

    () (ERI-CES)

  • Oscar Alvarez

    () (IEI)

Abstract

This 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

Suggested Citation

  • Pedro Cantos Sanchez & Rafael Moner-Colonques & Jose Sempere-Monerris & Oscar Alvarez, 2010. "Competition and horizontal integration in maritime freight transport," Discussion Papers in Economic Behaviour 0710, University of Valencia, ERI-CES.
  • Handle: RePEc:dbe:wpaper:0710
    as

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    References listed on IDEAS

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    1. repec:eee:transe:v:110:y:2018:i:c:p:90-109 is not listed on IDEAS
    2. repec:eee:transb:v:104:y:2017:i:c:p:337-356 is not listed on IDEAS
    3. Chen, Rongying & Dong, Jing-Xin & Lee, Chung-Yee, 2016. "Pricing and competition in a shipping market with waste shipments and empty container repositioning," Transportation Research Part B: Methodological, Elsevier, vol. 85(C), pages 32-55.
    4. Qu, Chenrui & Wang, Grace W.Y. & Zeng, Qingcheng, 2017. "Modelling port subsidy policies considering pricing decisions of feeder carriers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 99(C), pages 115-133.
    5. Lee, Chung-Yee & Song, Dong-Ping, 2017. "Ocean container transport in global supply chains: Overview and research opportunities," Transportation Research Part B: Methodological, Elsevier, vol. 95(C), pages 442-474.
    6. repec:eee:ecotra:v:11-12:y:2017:i::p:33-48 is not listed on IDEAS
    7. Llano, C. & De la Mata, T. & Díaz-Lanchas, J. & Gallego, N., 2017. "Transport-mode competition in intra-national trade: An empirical investigation for the Spanish case," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 334-355.
    8. Saeed, Naima, 2013. "Cooperation among freight forwarders: Mode choice and intermodal freight transport," Research in Transportation Economics, Elsevier, vol. 42(1), pages 77-86.
    9. Wang, Hua & Meng, Qiang & Zhang, Xiaoning, 2014. "Game-theoretical models for competition analysis in a new emerging liner container shipping market," Transportation Research Part B: Methodological, Elsevier, vol. 70(C), pages 201-227.

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    Keywords

    freight transport; shipping lines; horizontal integration;

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