This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Journal: Microeconomics
  4. Forthcoming Articles
  5. Long-Term Relationships in the US Truckload Freight Industry

Long-Term Relationships in the US Truckload Freight Industry

  • Adam Harris
  • Thi Mai Anh Nguyen
American Economic Journal: Microeconomics (Forthcoming)

Abstract

This paper provides evidence on the scope and incentive mechanisms of long-term relationships in the US truckload freight industry. In this setting, shippers and carriers engage in repeated interactions under fixed-rate contracts that allow for inefficient opportunism. The main dynamic mechanism involves shippers using the threat of relationship termination to deter carriers from short-term opportunism. This threat and the potential of future rents induce more carrier cooperation. We test this mechanism against likely alternatives and analyze relationship scope for different carrier types. We find that incentive schemes do not exploit the full temporal and spatial scope of relationships.

Downloads