Does vertical integration lead to horizontal collusion in container transport chains?

ABSTRACT

With the promotion of mode cooperation and integration in international trade transport in the context of intense globalization, vertical integration between container ports and liners, two key players in container transport chains, often leads to horizontal collusion between container ports. By establishing an infinitely repeated game with discrete time periods, this paper explores the interrelation, the possibility and the stability of the coexistence between vertical integration and horizontal collusion. Our primary finding is that vertical integration and horizontal collusion have mutually reinforcing effects. In particular, the former results in an increase in shippers’ surplus at the expense of the latter.

KEYWORDS:

• Container transport chain
• vertical integration
• horizontal collusion
• infinitely repeated game
• reinforcing effect This article is a revised and expanded version of a paper entitled ‘Decentralized versus Centralized Collusion in the Maritime Container Transportation: an Empirical test for the Maritime Silk Road’ presented at the 3rd International Conference of the Yangtze River Research and Innovation Belt
• Ningbo
• China
• 5-7 November 2020

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by National Natural Science Foundation of China [grant number 71774109, 42001114].