Department of Economics
Bloomington, IN 47405
Information about this author at RePEc
NBER Working Papers and Publications
|February 2007||The Trade Reducing Effects of Market Power in International Shipping|
with David Hummels, Alexandre Skiba: w12914
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 fa...
Published: Hummels, David & Lugovskyy, Volodymyr & Skiba, Alexandre, 2009.
"The trade reducing effects of market power in international shipping,"
Journal of Development Economics,
Elsevier, vol. 89(1), pages 84-97, May.
citation courtesy of
|December 2005||Trade in Ideal Varieties: Theory and Evidence|
with David Hummels: w11828
Models with constant-elasticity of substitution (CES) preferences are commonly employed in the international trade literature because they provide a tractable way to handle product differentiation in general equilibrium. However this tractability comes at the cost of generating a set of counter-factual predictions regarding cross-country variation in export and import variety, output per variety, and prices. We examine whether a generalized version of Lancaster's 'ideal variety' model can better match facts. In this model, entry causes crowding in variety space, so that the marginal utility of new varieties falls as market size grows. Crowding is partially offset by income effects, as richer consumers will pay more for varieties closer matched to their ideal types. We show theoretically an...
Published: Hummels, David, and Volodymyr Lugovskyy. "International Pricing in a Generalized Model of Ideal Variety." Journal of Money, Credit, and Banking 41 (February 2009): 3-33.