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AN APPLICATION OF CORE THEORY TO THE STUDY OF THE ORGANIZATION OF OCEAN SHIPPING MARKETS

Pirrong, Stephen

ProQuest Dissertations and Theses

ProQuest Dissertations Publishing

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  • Title:
    AN APPLICATION OF CORE THEORY TO THE STUDY OF THE ORGANIZATION OF OCEAN SHIPPING MARKETS
  • Author / Creator: Pirrong, Stephen
  • Published: ProQuest Dissertations Publishing
  • Summary: The theory of the core implies that certain cost and demand conditions prevent the efficient and stable operation of competitive markets, while alternative conditions do not. In particular, when producers must incur indivisible avoidable costs to service several customers a competitive equilibrium will frequently not exist. In these circumstances collusion may enhance efficiency by eliminating the "excessive competition" that precludes an equilibrium. When productive plants serve only one customer at a time, however, such existence problems do not occur and competition is a feasible form of organization. My dissertation tests the predictions of this theory for a particular industry: the ocean shipping industry. The coexistence of competition and collusion in this industry provides a challenge to any theory of industrial organization. The research demonstrates that indivisibilities pervade the costs of both "liner" and "bulk" vessels, but that liners serve numerous customers simultaneously while bulkers carry shipsized cargoes obtained fron a single shipper. Consistently with the theory, the liner sector is collusively organized while the bulk sector is competitive. Moreover, the liner cartels--commonly called "conferences"--utilize output quotas and/or capacity constraints as predicted by the theory. Finally, liner conferences have persisted for over 100 years despite the lack of any technological or structural barriers to entry. This is consistent with core theory's view of conferences as an efficiency enhancing institution and contradicts the traditional view of cartels as inefficient.
  • Language: English
  • Subjects: Economics ; Economics ; Social Sciences
  • Is Part Of: ProQuest Dissertations and Theses
  • Creation Date: 1987
  • Source: © ProQuest LLC All rights reserved
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