Strategic Interaction Amongst Australia's East Coast Ports

12 Pages Posted: 1 Oct 2007

See all articles by Flavio M. Menezes

Flavio M. Menezes

University of Queensland - School of Economics

Marcin Pracz

Australian National University (ANU) - School of Economics

Rod Tyers

Australian National University (ANU) - School of Economics; The University of Western Australia - Department of Economics

Abstract

Australia's principal container ports, located in its state capitals, are owned and operated by state authorities that largely return profits from port operations to state governments. Since they govern the volumes of trade in most merchandise, they command immense influence over the openness and flexibility of the national economy. In this study, we estimate the elasticities of substitution between container services of ports in Brisbane, Sydney and Melbourne. We also examine the pricing of port services to estimate the extent of their interaction, from which we derive conjectural variations parameters to assess the actual and potential levels of price collusion. The results confirm the conventional wisdom that the degree of substitution between the major east coast ports is small. While this highlights the possibility that these ports possess substantial market power, actual mark ups are considerably smaller than the predicted mark ups, suggesting that the ports' localised monopoly power is constrained by factors other than price competition.

Suggested Citation

Menezes, Flavio M. and Pracz, Marcin and Tyers, Rod, Strategic Interaction Amongst Australia's East Coast Ports. Australian Economic Review, Vol. 40, No. 3, pp. 267-278, September 2007. Available at SSRN: https://ssrn.com/abstract=1017930 or http://dx.doi.org/10.1111/j.1467-8462.2007.00451.x

Flavio M. Menezes (Contact Author)

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

Marcin Pracz

Australian National University (ANU) - School of Economics

Coombs Building 9
Canberra, Australian Capital Territory 0200
Australia

Rod Tyers

Australian National University (ANU) - School of Economics ( email )

Arndt Building
Australian National University
Canberra, Australian Capital Territory 0200
Australia
61-6-249-5124 (Fax)

The University of Western Australia - Department of Economics ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia
61 8 6488 5632 (Phone)

HOME PAGE: http://www.business.uwa.edu.au/school/staff-profiles?type=profile&dn=cn%3DRodney%20Tyers%2Cou%3DEcon

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