Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/334649 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12293
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
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
Subjects: 
market power
transportation
price discrimination
trade costs
inflation
intermediaries
JEL: 
F1
L2
Document Type: 
Working Paper
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