Abstract

I examine the outcomes of cases of entry by merchant shipping lines into established markets around the turn of the century. These established markets are completely dominated by an incumbent cartel composed of several member shipping lines. The cartel makes the decision whether or not to begin a price war against the entrant; some entrants are formally admitted to the cartel without any conflict. I use characteristics of the entrant to predict whether or not the entrant will encounter a price war conditional on entering. I find that weaker entrants are fought, where weaker means less financial resources, experience, size, or poor trade conditions. The empirical results provide support for the long purse theory of predation. I discuss qualitative evidence such as predatory intent expressed in correspondence between cartel members which supports the empirical results. The results are also found to be robust to misclassification of the dependent variable which is a particular concern when dealing with historical data.


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The different versions of the original document can be found in:

http://dx.doi.org/10.1111/j.1430-9134.1997.00679.x under the license http://doi.wiley.com/10.1002/tdm_license_1.1
https://www.nber.org/papers/w5663.pdf,
https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1430-9134.1997.00679.x,
https://core.ac.uk/display/21556272,
http://www.catchword.com/cgi-bin/cgi?body=linker&ini=xref&reqdoi=10.1162/105864097567237,
https://papers.ssrn.com/sol3/Delivery.cfm/nber_w5663.pdf?abstractid=4332&mirid=3,
https://ideas.repec.org/a/bla/jemstr/v6y1997i4p679-724.html,
https://papers.ssrn.com/abstract=4332,
https://EconPapers.repec.org/RePEc:bla:jemstr:v:6:y:1997:i:4:p:679-724,
http://m.nber.org/papers/w5663,
https://academic.microsoft.com/#/detail/2151093718


DOIS: 10.1111/j.1430-9134.1997.00679.x 10.1162/105864097567237 10.3386/w5663

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Published on 01/01/1996

Volume 1996, 1996
DOI: 10.1111/j.1430-9134.1997.00679.x
Licence: Other

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