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Exclusive Contracts And Market Power: Evidence From Ocean Shipping
Author(s) -
Marín Pedro L.,
Sicotte Richard
Publication year - 2003
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00198
Subject(s) - stock (firearms) , empirical evidence , event study , business , market power , stock market , politics , loyalty , economics , financial economics , industrial organization , microeconomics , marketing , mechanical engineering , paleontology , philosophy , context (archaeology) , epistemology , horse , engineering , biology , monopoly , political science , law
There is a substantial theoretical literature on the potential effects of loyalty contracts, but relatively little empirical work. We employ the event study methodology to examine the competitive effects of exclusionary contracts in the ocean shipping industry, where they were the subject of an extended legal and political struggle. We find that some of the most important events in this conflict caused significant changes in shipping firms' stock returns, indicating exclusive contracts increased their profits. We then examine the effect of these events on net exporting industries' stock returns, and provide evidence that these contracts contributed to carriers' market power.