Competition and Price Discrimination in International Transportation

Anna Ignatenko ()
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Anna Ignatenko: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway, https://www.annaignatenko.com/

No 6/2024, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: This paper documents price discrimination by transport companies, revealing their market power. Larger shipments of similar products sharing a container receive lower prices. A trade model with non-linear pricing of transportation rationalizes this with economies of scale and price discrimination, highlighting their distinct policy implications. To distinguish them, I test for the effect of competition on freight price variation specific to price discrimination. Using unexpected water level changes to instrument for competition in river transportation, I find increased competition causes steeper discounts for larger shipments. Thus, market power in transportation is less distortionary for larger firms gaining additional cost advantages.

Keywords: price discrimination; quantity discounts; transportation; competition; economies of scale; mark-ups; market power (search for similar items in EconPapers)
JEL-codes: D22 D43 F10 F12 F14 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2024-04-26
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind, nep-int, nep-reg and nep-tre
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