STICERD Industrial Organisation Seminars
Understanding Port Performance and the Role of Infrastructure
Myrto Kalouptsidi (Harvard University), joint with Giulia Brancaccio and Theodore Papageorgiou
Monday 05 June 2023 12:30 - 14:00
Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events. Please check our website listings and Twitter feed @STICERD_LSE for updates.
Unless otherwise specified, in-person seminars are open to the public.
Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.
About this event
We explore efficiency and optimal policy in decentralized transport markets, such as taxis, trucks, and bulk shipping. We show that in these markets, search frictions distort the transportation network and the dynamic allocation of carriers over space. We derive explicit and intuitive conditions for efficiency, and show how they translate into efficient pricing rules, or optimal taxes and subsidies for the planner who cannot set prices directly. The results imply that destination-based pricing is essential to attain efficiency. Then, using data from dry bulk shipping, we demonstrate that search frictions lead to a sizeable social loss and substantial misallocation of ships over space. Optimal policy can eliminate about half of the welfare loss. Can a centralizing platform, often arising as a market-based solution to search frictions, do better? Interestingly, the answer is no; although the platform eradicates frictions, it exerts market power thus eroding the welfare gains. Finally, we use two recent interventions in the industry (China’s Belt and Road Initiative and the environmental initiative IMO 2020) to demonstrate that taking into account the efficiency properties of transport markets is germane to any proposed policy.
Industrial Organisation seminars are held on Mondays in term time at 12:30-14:00, in person in SAL 3.05, unless specified otherwise.
Seminar organiser: Alessandro Gavazza.
For further information please contact Sadia Ali: firstname.lastname@example.org.
Please use this link to subscribe or unsubscribe to the Industrial Organisation seminars mailing list (industry).