Multi-part pricing in the US Less-than-Truckload Motor Carrier Industry

Less-than-truckload motor carriers, which handle goods of unrelated customers, generally charge separately for base, fuelling, and accessory services. We develop and estimate a monopolistically competitive model of these multi-part structures — particularly base and fuelling — allowing joint inference about price strategy and technology. We find that although base and fuelling are priced separately, the services themselves are technologically partly joint. Nevertheless, base charges defray the more liquid inputs, where scale returns are constant — while fuelling charges tend to cover the carrier’s scarcer resources, where scale returns are decreasing. Unsurprisingly then, market power is achieved primarily in the prices charged to fuelling.