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Elephants or Goldfish? An Empirical Analysis of Carrier Reciprocity in Dynamic Freight Markets

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  • Angela Acocella
  • Chris Caplice
  • Yossi Sheffi

Abstract

Dynamic macroeconomic conditions and non-binding truckload freight contracts enable both shippers and carriers to behave opportunistically. We present an empirical analysis of carrier reciprocity in the US truckload transportation sector to demonstrate whether consistent performance and fair pricing by shippers when markets are in their favor result in maintained primary carrier tender acceptance when markets turn. The results suggest carriers have short memories; they do not remember shippers' previous period pricing, tendering behavior, or performance when making freight acceptance decisions. However, carriers appear to be myopic and respond to shippers' current market period behaviors, ostensibly without regard to shippers' previous behaviors.

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  • Angela Acocella & Chris Caplice & Yossi Sheffi, 2021. "Elephants or Goldfish? An Empirical Analysis of Carrier Reciprocity in Dynamic Freight Markets," Papers 2108.07348, arXiv.org.
    • Handle: RePEc:arx:papers:2108.07348
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    3. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-856, July.
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