American Shipping Cartels in the Pre-World War I Era

58 Pages Posted: 24 May 1999

See all articles by George Deltas

George Deltas

University of Illinois at Urbana-Champaign - Department of Economics

Konstantinos Serfes

Drexel University

Richard A. Sicotte

University of Vermont - Department of Economics

Date Written: March 1999

Abstract

This paper surveys the formation of the US shipping cartels (conferences) and their state of development before the onset of World War I. These cartels ranged from simple price agreements to very complex and tight revenue pooling agreements. The focus of the paper is to identify the factors that influence the choice of the cartel organizational form. We find that the degree of collusion is higher in routes in which entry of competing firms is less likely, in routes with fewer firms of relative unequal size, and in routes in which member firms have large global capacity. We also find that multi-market contact facilitates collusion, i.e., a cartel is more likely to be "tight" if its members are also interacting in many other routes. These results indicate that complex cartels, as opposed to simple rate agreements, are formed when organizational costs are lower and enforcement easier and more credible.

JEL Classification: L41, N70, N71, L92

Suggested Citation

Deltas, George and Serfes, Konstantinos and Sicotte, Richard A., American Shipping Cartels in the Pre-World War I Era (March 1999). Available at SSRN: https://ssrn.com/abstract=164608 or http://dx.doi.org/10.2139/ssrn.164608

George Deltas (Contact Author)

University of Illinois at Urbana-Champaign - Department of Economics ( email )

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Konstantinos Serfes

Drexel University ( email )

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Richard A. Sicotte

University of Vermont - Department of Economics ( email )

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