A New Theory of the Shipping Firm in the Framework of Pure Competition

This paper came out from one of the great questions—systematically avoided by Maritime Economists: “Is shipping industry working in a perfect competition?” We concentrated on dry and liquid cargoes. First, we wrote down theoretical requirements for Perfect competition compared them with actual ones. distinguished “free entry” as most important condition, which however became harder LNG-newbuilding may cost $200 m over. Next, corrected existing theory, wanted to maximize profits any entire fleet, showed that company must aim at maximizing ship’s voyage profit. mentioned cases where was distorted. In addition, detailed analysis Demand ship space Supply it, attempted so reach interplay demand supply, is price services. Moreover, rejected Marshall’s distinctions short- long-periods companies, established companies are always long-run, but simply unable build ships. changes philosophy company’s strategy.