Price Discrimination and Competition in International Transport
The paper titled "Price Discrimination and Competition in International Transport" by Anna Ignatenko has been published in Journal of International Economics.
Abstract
Using uniquely detailed data, I document large freight price variation across shipments of similar products transported within the same container on the same route. I rationalize this variation using a trade model that incorporates economies of scale and price discrimination in transportation. I derive each mechanism’s 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 as an instrument for competition in river transportation, I find increased competition causes steeper discounts for larger shipments. Thus, freight price variation is explained by market power of transport companies and is less distortionary for larger firms, who gain additional cost advantages.