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Own, Rent, or Rent-Seek?: Vertical Integration in Historical Chartered Monopolies

Chartering Capitalism: Organizing Markets, States, and Publics

ISBN: 978-1-78560-093-7, eISBN: 978-1-78560-092-0

ISSN: 0198-8719

Publication date: 10 August 2015

Abstract

The Royal African Company, the Hudson’s Bay Company, and the East India Company used both owned and hired ships in their seventeenth and eighteenth century trading operations. Why such critical assets were sometimes owned and sometimes rented is explored. Contrary to economic reasoning, ship rentals occurred in shipping markets that were uncompetitive. The use of hired ships was correlated instead to market power in the companies’ selling or output markets. The pattern of ship ownership can be attributed to the close social proximity of shipowners to decision-makers in the companies. By modeling the input hiring decision while allowing for variation in the competitiveness of output markets, it is argued that rent-seeking behavior on the part of company insiders may explain the ownership patterns.

Keywords

Acknowledgements

Acknowledgment

Special thanks to Barbara McCutcheon for her contributions early in the project.

Citation

Hejeebu, S. (2015), "Own, Rent, or Rent-Seek?: Vertical Integration in Historical Chartered Monopolies", Chartering Capitalism: Organizing Markets, States, and Publics (Political Power and Social Theory, Vol. 29), Emerald Group Publishing Limited, Bingley, pp. 177-206. https://doi.org/10.1108/S0198-871920150000029008

Publisher

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Emerald Group Publishing Limited

Copyright © 2015 Emerald Group Publishing Limited