A model of logistics services with heterogeneous firms

Abstract

This expansion of e-commerce comes out to positive demand shock for logistics services in Baltics. The target of research is to analyze this growing market, demand for logistics services, and supply thereof. For this purposes, authors apply standard empirical industrial organization model of BLP together with some developments from models of monopolistic competition. The proposed empirical model deals with vertical differentiation of services in the market. Our empirical research shows that logistics services are differentiated significantly due to investments into the quality of services. Higher quality helps to keep leading position and lower marginal costs for the leader of market.