I was reading about the frequent congestion in US ports and the resulting effect on the US economy. I feel there are unique features to this setting. When ports face congestion, they levy charges, and these are transferred on to the buyers by the shippers. On top of this, costs of delayed reception of goods are also borne by the retailers only. The only 'catch' for ports arises if the congestion is so high that firms shift to air transport or reroute through a farther port and incur road transport expenses.

Are there papers which model the economic interactions like competition between ports, or the interactions between firms, ports and labour unions?


In America, on the West coast, unions negotiate a common contract:

Ironically, the International Longshore and Warehouse Union is a beneficiary of the same forces that are killing unions everywhere else: Its workers are the folks who unload the stuff that comes in from abroad. Those workers are sitting right at the bottleneck through which all that foreign competition flows to the U.S., and due to some smart planning by the union in earlier decades -- such as insisting that the West Coast ports would bargain as a bloc so that they can't play different locals against each other -- they can cork that bottle anytime they want. That gives them the ability to extract a little tariff on all that trade. Their rake-off is a tiny fraction of the overall flows, but that still translates into substantial sums for the few thousand workers who are holding onto that cork. The more trade, the better the concessions the ILWU is able to extract -- and the worse workers in other unions do.

Where Have All Our Wages Gone? by Megan Mcardle

There used to be a pre-anti-trust era railroad cartel in the USA:

The [Joint Executive Committee (JEC)] was a cartel formed by the railroads which controlled eastbound freight shipments from Chicago to the Atlantic seaboard in the I 88os. The agreement was publicly acknowledged, as it preceded the passage of the Sherman Act (1890) and the formation of the Interstate Commerce Commission (1887). ... The JEC cartel agreement took the form of market share allotments rather than absolute amounts of quantity shipped. Firms set their rates individually, and the JEC office took weekly accounts so that each railroad could see the total amount transported. Total demand was quite variable, and the actual market share of any particular firm depended on both the prices charged by all the firms and unpredictable stochastic forces.

On the Incidence and Duration of Price Wars (Porter (1985))

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  • $\begingroup$ The competition between shipping groups is sometimes modeled by spatial priceing models or Hotelling models. John S. Heywood has done a good deal of work on this area in recent years. $\endgroup$ – RegressForward Jul 11 '15 at 18:16

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