It Pays to Be Big: Price Discrimination in Maritime Shipping

52 Pages Posted: 17 May 2022

See all articles by Adina Ardelean

Adina Ardelean

Santa Clara University

Volodymyr Lugovskyy

Indiana University Bloomington - Department of Economics

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Abstract

We explore theoretically and empirically the within-route price discrimination in liner shipping and condition it on the market density. Using transaction-level data from over 200 Chilean import port-to-port routes, we confirm our theoretical predictions and demonstrate their robustness and economic significance. Quantitatively, importers in the 10th percentile pay 23% higher freight rates than importers in the 90th percentile, but only on routes with more than three carriers. Our results indicate that reducing market power distortion in the upstream sector (transportation) may amplify the informational friction distortion and price discrimination in the downstream sectors (importing industries).

Keywords: International Trade Costs, Freight Rate, Firm Size Advantage, Maritime Shipping

Suggested Citation

Ardelean, Adina and Lugovskyy, Volodymyr, It Pays to Be Big: Price Discrimination in Maritime Shipping. Available at SSRN: https://ssrn.com/abstract=4111937 or http://dx.doi.org/10.2139/ssrn.4111937

Adina Ardelean

Santa Clara University ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

Volodymyr Lugovskyy (Contact Author)

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States

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