Price Discrimination in the Transport Industry and the Gains from Trade

Han Zheng

No HIAS-E-123, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: Shipping companies often charges nonlinear and discriminatory pricing for transportation. This paper shows that this nonlinear and discriminatory pricing in the shipping industry could hamper the welfare gains from trade due to withinindustry allocation across heterogeneous firms. I extend a standard heterogeneous firm trade model with variable markups by incorporating monopolistically competitive shipping companies that charge nonlinear and discriminatory pricing against manufacturers. In a standard setting, shipping companies optimally charge a higher transport price to the more productive firms, weakening within-industry reallocation toward productive firms. Elimination of this discriminatory practice could potentially increase the gains from trade.

Keywords: Price discrimination; Shipping industry; Heterogeneous firms; The gains from trade (search for similar items in EconPapers)
JEL-codes: F12 L91 R13 R41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2022-10
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind and nep-tre
Note: October 12, 2022
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/74326/070_hiasDP-E-123.pdf

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hiasdp:hias-e-123

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