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Principles of Economics- Mankiw (5th) 344

Principles of Economics- Mankiw (5th) 344 - 354 PA R T F I...

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354 PART FIVE FIRM BEHAVIOR AND THE ORGANIZATION OF INDUSTRY C ARTELS ARE RARE , IN PART BECAUSE THE antitrust laws make them illegal. As the following article describes, however, ocean shipping firms enjoy an unusual exemption from these laws and, as a re- sult, charge higher prices than they oth- erwise would. A s U . S . Tr a d e G r o w s , S h i p p i n g C a r t e l s G e t a B i t M o r e S c r u t i n y B Y A NNA W ILDE M ATTHEWS R UTHERFORD , N.J.—Every two weeks, in an unobtrusive office building here, about 20 shipping-line managers gather for their usual meeting. They sit around a long conference table, exchange small talk over bagels and coffee and then be- gin discussing what they will charge to move cargo across the Atlantic Ocean. All very routine, except for one de- tail: They don’t work for the same com- pany. Each represents a different shipping line, supposedly competing for business. Under U.S. antitrust law, most people doing this would end up in court. But shipping isn’t like other busi- nesses. Many of the world’s big shipping lines, from Sea-Land Service Inc. of the U.S. to A. P. Moller/Maersk Line of Den- mark, are members of a little-noticed
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