Industry Dynamics with Cartels: The Case of the Container Shipping Industry

Abstract

This paper studies how shipping conferences---explicit cartels---shaped container shipping through prices, entry, and investment from 1973--1990. I estimate a structural model to disentangle static pricing and internal allocation effects from dynamic entry and investment responses. \textcolor{black}{Estimated price wedges equal 30--70\% of mean observed freight rates, and conference rents encouraged entry and shipbuilding.} \textcolor{black}{Removing the conference regime barely changes consumer plus producer surplus but raises net social welfare across markets by reducing resource costs.} For fixed route quantity, \textcolor{black}{the capacity-proportional benchmark allocation} equalizes members' marginal costs, but alternative quota tilts produce different dynamic welfare rankings across markets.

arXiv comment40 pages and 23 pages appendix