Journal of Korean Society of Transportation (대한교통학회지)

Korean Society of Transportation (대한교통학회)
권호 표지

Estimates of Economies of Scale and Economies of Density in the Ocean Shipping Industry

외항해운산업의 비용함수 추정 : 규모 및 밀도의 경제성 분석을 중심으로

  • 하영석 (계명대학교 사회과학대학 무역학과)
  • Published : 1996.06.01
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Abstract

The long-existed licence system which has acted as one of the strong barriers to entry in the ocean shipping market in Korea is supposed to repeal in the near future. As a result, competition among the different sizes of firms which are operating under regional shield by means of the licence will be intensified. The main objective of this paper is to estimate the degree of economies of scale and economies of density for various firm sizes. For the successful estimation of economies scale and economies of density, translog cost models are developed and estimated through SURE technique which was suggested by Zeller (1963). The major findings are as follows ; All shipping firms in the sample exhibit economies of scale and density. Even small size shipping firms under licence system, they show substantial economies of scale contrary to the wide-known idea that small-size firms are subject to diseconomies of scale. For the ranked firm sizes according to owned deadweight tons, the degree of economies of scale decreases as the firm sizes are larger and larger. The degree of economies of density moderately declines from the smallest to the firm size of 30-60 thousand deadweight tons and sharply rise thereafter. And the large shipping firms with over half-million deadweight tons exhibit high economies density compared to other sizes of firm. If follows that the larger firms have great advantage in competition if the licence system is abolished.

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References

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