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Edited by André de Palma, Robin Lindsey, Emile Quinet and Roger Vickerman
Chapter 37: Competition and Regulation in Maritime Transport
Mary R. Brooks INTRODUCTION Shipping has been an international business since the days of the Phoenician traders, and a truly global industry since the advent of the flag of convenience (FOC, for example, Panama and Liberia) during the Prohibition era in the United States. Inputs to shipping businesses are purchased from the most cost-effective source; mobility of assets and the ability to source labor (seafarers) and capital equipment (ships, containers) from the most advantageous seller also mark shipping as a long-established global business. The industry, likely the first to fully exploit tax havens and multi-level holding company arrangements, provides an interesting window through which those interested in firm behavior, competition and regulation may look at strategies taken by maritime transport companies in response to globalization and the role regulation plays in shaping those strategies. While there are many sectors to the industry, it is generally conceded that the majority of shipping activities can be categorized into two main groups – the tramp market and the liner market. These sectors are secondary markets derived from the demand for traded goods, and are discussed in more detail later in the chapter. Figure 37.1 illustrates the nature of the maritime transport market supply and demand. The industry thus has three major players: those who carry the cargo (the right hand circle), those who supply the cargo (the left hand circle) and those that provide supports or inputs to these two so that the transport service may take place. The demand for shipping from cargo...
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