Market Power at Sea: Micro Evidence, Macro Implications

Anna Ignatenko, Pierre Cariou, Haiying Jia and Francois-Charles Wolff

No 12293, CESifo Working Paper Series from CESifo

Abstract: We separate the effects of market power and capacity constraints in transportation. A simple model shows imperfect competition—not capacity constraints—generates differential freight price changes across buyers following a demand shock. Consistent with this, difference-in-differences estimates reveal, after COVID-19 demand surge, freight forwarders faced a 30 pp larger increase in base freight rates than direct shippers despite identical contract terms. This reflects rising carrier markups that disproportionately burden smaller firms and explain at least 35% of freight price growth and 16% of U.S. import price inflation. Thus, competition in transportation is crucial for supplychain resilience and macroeconomic stability

Keywords: market power; transportation; price discrimination; trade costs; inflation; intermediaries (search for similar items in EconPapers)
JEL-codes: F1 L2 (search for similar items in EconPapers)
Date: 2025
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