Stimulating mergers between stevedores

Using a discrete-choice perspective and emphasizing the differentiated-goods nature of container handling, this article empirically studies the price and welfare effects of the 2001 merger between Antwerp-based container handlers Hessenatie and Noord Natie. Results show that: (i) the merger between Hessenatie and Noord Natie causes relatively small price increases and losses to consumer surplus and total welfare, confirming the clearance of the merger by the Belgian Competition Authority; (ii) increased substitutability among container handlers and more realistic shipper/carrier substitution patterns tend to mitigate welfare losses from mergers in this industry and; (iii) allowing for post-merger costs savings, price decreases passed on to shippers/carriers entail significant increases in both consumer surplus and total welfare. Additionally, market power is shown to be more sensitive to changes in inter-handler substitutability than increasing complexity of consumer substitution.

Publication year:2010

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Authors from:Higher Education