Liberalization and Deregulation in the Domestic Shipping Industry: Effects on Competition and Market Structure

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The author, at the outset of her study on shipping transport, rightly states the importance of this industry in an archipelagic country. However, the industry remains inefficient, despite policy reforms enacted in the 1990s which aimed at liberalizing and deregulating the industry. Though these reforms did improve services through increased competition and the entry of new service providers, this occurs on only a fraction of routes and the largest handful of companies effectively dominate the bigger part of the market, and, in the process, show indications of cartel behavior. The author stresses that the next steps for reform include preparing local shipping firms for the global competition that full liberalization will bring, and which stands to yield hoped-for efficiencies and improvements.