@article{Hummels:331576,
      recid = {331576},
      author = {Hummels, David and Lugovskyy, Volodymyr and Skiba,  Alexandre},
      title = {The Trade Reducing Effects of Market Power in  International Shipping},
      address = {2007},
      pages = {36},
      year = {2007},
      note = {Presented at the 10th Annual Conference on Global Economic  Analysis, Purdue University, USA},
      abstract = {Developing countries pay substantially higher  transportation costs than developed nations, which leads to  less trade and perhaps lower incomes. This paper  investigates price discrimination in the shipping industry  and the role it plays in determining transportation costs.  In the presence of market power, shipping prices depend on  the demand characteristics of goods being traded. We show  theoretically and estimate empirically that shipping firms  charge higher prices when transporting goods with higher  product prices, lower import demand elasticities, and  higher tariffs, and when facing fewer competitors on a  trade route. These characteristics explain more variation  in shipping prices than do conventional proxies such as  distance, and significantly contribute to the higher  shipping prices facing the developing world. Markups  increase shipping prices by at least 83 percent for the  mean shipment in Latin American imports. Our findings are  also important for evaluating the impact of tariff  liberalization. Shipping firms decrease prices by 1-2  percent for every 1 percent reduction in tariffs.},
      url = {http://ageconsearch.umn.edu/record/331576},
}