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Market Power at Sea: Micro Evidence, Macro Implications

Author

Listed:
  • Anna Ignatenko
  • Pierre Cariou
  • Haiying Jia
  • Francois-Charles Wolff

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

Suggested Citation

  • Anna Ignatenko & Pierre Cariou & Haiying Jia & Francois-Charles Wolff, 2025. "Market Power at Sea: Micro Evidence, Macro Implications," CESifo Working Paper Series 12293, CESifo.
    • Handle: RePEc:ces:ceswps:_12293
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    File URL: https://www.ifo.de/DocDL/cesifo1_wp12293_0.pdf
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    JEL classification:

    • F1 - International Economics - - Trade
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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