Collusion in Ocean Shipping: A Test of Monopoly and Empty Core Models

In markets with avoidable fixed costs, the core may be empty. I argue that a reason for collusion is to impose an equilibrium where none exists. I set up a framework for deriving testable implications from the model and compare those implications with those of a cartel model. I compare the two model...

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Veröffentlicht in:The Journal of political economy 1989-10, Vol.97 (5), p.1160-1179
1. Verfasser: Sjostrom, William
Format: Artikel
Sprache:eng
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Zusammenfassung:In markets with avoidable fixed costs, the core may be empty. I argue that a reason for collusion is to impose an equilibrium where none exists. I set up a framework for deriving testable implications from the model and compare those implications with those of a cartel model. I compare the two models empirically with data from liner shipping conferences, legal collusive agreements that have been in force for over a century, and I conclude that the evidence supports the theory of the core.
ISSN:0022-3808
1537-534X
DOI:10.1086/261647