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

Abstract

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.