Hitotsubashi Institute for Advanced Study


Price Discrimination in the Transport Industry and the Gains from Trade


This paper shows that the shipping industry could hamper the endogenous firm selection into production which is conducive to the overall productivity enhancement and welfare gains, through its discriminatory price. Naturally, if the shipping industry charges a higher transport price to the more productive manufacturing firms, sabotaging their competitive edges, those productive firms would not be capable of expanding as well as they otherwise would do under uniform transport fees, leaving enough space for the less productive firms to survive. Therefore, the effect from another source of gains from trade, firm selection is dampened. Elimination of this discriminatory practice could potentially increase the gains from trade.

Report No.: HIAS-E-113
Author(s): Han Zheng (a)
Affiliation: (a) Hitotsubashi Institute for Advanced Study, Hitotsubashi University
Issued Date: September 2021
Keywords: Price discrimination, Shipping industry, Heterogeneous firms, The gains from trade
JEL: F12, L91, R13, R41