Abstract
In this paper, we explore the effect of revenue-sharing contracts between ports and shipping lines to counter the negative effects of parallel shipping alliances. We consider a vertical structure approach formed by port-shipping line chains, where ports are considered the upstream market, while shipping lines are the downstream market. Then, we propose the vertical integration of both chains as a solution to the loss of welfare because of the shipping alliance. We find that when ports may influence the downstream markets, welfare increases, and it is a proper ports response that port horizontal cooperation.
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