Technological Change and the Production of Ocean Shipping Services

This paper presents results for the estimation of a translog variable profit function for the subsidized U.S. liner shipping industry. In a study of fifteen firms for the period from 1971 through 1982, the estimation results for a translog variable profit function indicate an industry characterized by input-saving technological changes in the cargo-handling input and important scale economies that increase in extent over the period. At the beginning of the period, the U.S. liner shipping industry included fifteen subsidized firms and several unsubsidized firms. At this writing, four subsizied firms and one unsubsidized firm remain. The technological changes examined here and the diffusion of that technology throughout the international shipping industry are major factors in explaining that dramatic restructuring.