Alliances and Concentration: The Economic Consequences of Market Structure in the Liner Shipping Industry

Over the last twenty years a wave of consolidation has swept through the oceanic liner shipping industry, leaving the industry dominated by a small number of large firms organized into a handful of strategic alliances. As liner shipping is the dominant form of international transportation these changes have likely had a substantial impact of the global trading system. This paper empirically examines the relationship between strategic alliances in liner shipping on trade flows, using a unique data set with a geographic and temporal coverage not available in previous works. The empirical results suggest that strategic alliances as a group are inhibiting trade, although some strategic alliances seem to be encouraging trade. An analysis of the major alliances provides suggestive evidence that the economic impacts of an alliance depend on how strongly the alliance can control its member firms’ activities.