Entry and Predation: British Shipping Cartels 1879-1929 / Fiona Scott Morton.

Format:

Book

Author/Creator:

Scott Morton, Fiona.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5663.

NBER working paper series no. w5663

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Entry and Predation

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1996.

Summary:

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.

Notes:

Print version record

July 1996.