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Do Larger Importing Firms Face Lower Freight Rates?

Author

Listed:
  • Adina Ardelean

    (Santa Clara University)

  • Volodymyr Lugovskyy

    (Indiana University)

Abstract

This paper documents that, even within a narrowly defined product and port-to-port route, the maritime international freight rates are lower for larger importing firms. Even after controlling for shipment sizes, the 90th-percentile importing firm faces a 20% lower freight rate and, as a result, a 1.8% lower delivered price for a given product and route than the 10th-percentile firm. The firm size matters only in the presence of some degree of competition among shippers?monopoly shippers charge a higher, but symmetric freight rates across all firms. These results are consistent with our theoretical predictions and are robust to multiple robustness checks, including controlling for the size of an exporting firm. We further argue that asymmetries in access to imports affect input prices, TFP estimation, and magnify the extent of firm size heterogeneity.

Suggested Citation

  • Adina Ardelean & Volodymyr Lugovskyy, 2020. "Do Larger Importing Firms Face Lower Freight Rates?," CAEPR Working Papers 2020-002 Classification-, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    • Handle: RePEc:inu:caeprp:2020002
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    File URL: https://caepr.indiana.edu/RePEc/inu/caeprp/caepr2020-002.pdf
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    Citations

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    Cited by:

    1. Zheng, Han & Fujii, Daisuke, 2021. "Nonlinear Pricing in the Transport Industry and the Gains from Trade," Discussion paper series HIAS-E-112, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    2. Zheng, Han, 2022. "Price Discrimination in the Transport Industry and the Gains from Trade," Discussion paper series HIAS-E-123, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    3. Cristina Herghelegiu & Evgenii Monastyrenko, 2020. "Risk and Cost Sharing in Firm-to-Firm Trade," DEM Discussion Paper Series 20-24, Department of Economics at the University of Luxembourg.
    4. Zheng, Han, 2021. "Price Discrimination in the Transport Industry and the Gains from Trade," Discussion paper series HIAS-E-113, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.

    More about this item

    Keywords

    Freight Rates; Firm Size Advantage; Maritime Shipping;
    All these keywords.

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