ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Economists Case against Liner Conferences

Economists' Case against Liner Conferences S N Sanklecha ALTHOUGH in recent years the freight rates and practices of the liner Conferences have been the subject of quite a few studies, there is a dearth of studies on economics of liner service pricing. Esra Bennathan and A A Walters, who are economists with a background of shipping economics, are therefore to be congratulated for bringing out a valuable study on the subject.* Although the title of the book is "Economics of Ocean Freight Rates", the book deals with the economic principles on the basis of which freight rates under the cartels of liner shipping companies are fixed. The world shipping industry is divided in two distinct sectors. One sector sells its shipping services on the open market under conditions of competition and includes in its fold the fleets of conventional tramps, bulk carriers and tankers. The other sector, which consists of fleets providing liner services, is controlled by Conferences of liner shipping companies on various trade routes. The freight rates in this cartelised sector are set by the Conferences. The two sectors arc not wholly water-tight because there is scope for some substitution at the margin on the supply side (supply of shipping services) as well as on the demand side (demand for shipper services) between the two sectors.

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