Some doubts on the contestability of liner shipping markets

Some authors have invoked the theory of market contestability in defense of the closed conference system. They argue that the alleged monopoly power vested in closed conferences will not be abused because of the existence of the mere threat of competition by potential new entrants in these allegedly contestable markets. They conclude that liner shipping markets are 'highly' contestable. The author of this article differs from this view. He shows how, in a number of important areas, certain features of liner shipping behavior and markets do not accord with the original tenets of market contestability theory.