Deregulating International Markets: The Examples of Aviation and Ocean Shipping

During the past ten years, the United States has loosened economic regulation and increased competition in many domestic industries, including banking, telecommunications, airlines, railroads, trucking, and intercity busing. Although early signs suggest that domestic deregulation will be a success, U.S. firms still face substantial barriers to competition in many international markets. In ocean shipping and international aviation, for example, the U.S. government has signed treaties that limit service between the United States and foreign countries and that divide markets between the national carriers of each country. In both industries, the U.S. government also tolerates cartels that attempt to set prices and control capacity