Title: Switching costs and geographic price discrimination in the ship management industry

Authors: Antonis A. Michis

Addresses: Central Bank of Cyprus, 80, Kennedy Avenue, CY-1076, Cyprus

Abstract: The ship management industry operates on a global scale and is often associated with business practices such as repeated short-term contracts, long-term customer relationships, and international variation in pricing agreements. Using a unique dataset and a semi-parametric hedonic model specification, we investigated the determinants of ship management fees with particular emphasis on the identification of price mark-ups associated with switching costs. Our results suggest: 1) the existence of a 'lo-hi' pricing pattern that is consistent with theoretical studies of switching costs; 2) the exercise of geographic price discrimination by ship management firms. Ship management fees were also found to be influenced by a set of vessel, company, and management service characteristics.

Keywords: switching costs; geographic price discrimination; ship management; fixed effects.

DOI: 10.1504/IJSTL.2023.136045

International Journal of Shipping and Transport Logistics, 2023 Vol.17 No.4, pp.414 - 450

Received: 24 Feb 2021
Accepted: 10 Mar 2022
Published online: 15 Jan 2024 *

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