TY  - JOUR
AU  - Morton,Fiona Scott
TI  - Entry and Predation: British Shipping Cartels 1879-1929
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5663
PY  - 1996
Y2  - July 1996
UR  - http://www.nber.org/papers/w5663
L1  - http://www.nber.org/papers/w5663.pdf
N1  - Author contact info:
Fiona Scott Morton
Yale School of Management
Box 208200
New Haven, CT 06520-8200
Tel: 203/432-5569
Fax: 203/432-6974
E-Mail: fiona.scottmorton@yale.edu
AB  - 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.
ER  -