Estimates of translog cost functions and productivity in the shipping industry in Korea.
Item
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Title
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Estimates of translog cost functions and productivity in the shipping industry in Korea.
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Identifier
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AAI9207077
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identifier
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9207077
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Creator
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Ha, Yeong-Seok.
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Contributor
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Adviser: Michael Grossman
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Date
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1991
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Language
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English
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Publisher
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City University of New York.
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Subject
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Transportation | Economics, Commerce-Business | Economics, Theory
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Abstract
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The purpose of this study is to analyze various economic phenomena of the shipping industry in Korea using the translog variable cost function which is treated as a second-order Taylor series approximation to an arbitrary underlying cost function. Since the variable cost model is considered in this study, the capital is treated as a quasi-fixed input throughout the study.;By adopting the methodology suggested by Caves et. al. (1981), productivity growth of the industry was estimated. The findings of productivity growth can partly answer questions on how responsive the industry is to changes in government policies (or regulations), to changes in input prices, and to why subsidy of the industry is necessary.;This study applies the seemingly unrelated regression analysis (SURE) for the cost function and the cost share equations, assuming that nonzero correlations for the equations of same year and zero correlation for the equations of different years. To verify proper function of the industry, the likelihood ratio test was made by calculating the determinants off the unrestricted and restricted estimates of the disturbance var-covariance matrix.;The main findings of this study are: the higher elasticity of substitution between labor and supply was found to be average and the own price elasticity of labor was relatively bigger compared to that of supply and fuel, implying that the wage rates are highly negotiable. Economies of densities of the industry are high in general but decreased over the period 1964-1983, were negative in 1983, and recovered thereafter.;The likelihood ratio test reveals that the assumptions of homotheticity and homogeneity cost structure of the industry are inappropriate, ruling out the use of Cobb-Douglas functional form. Moreover, the results are fortified by the fact that the elasticities of substitution are significantly below unity.;The average productivity growth rates of the industry are generally low compared to the growth rates of the Korean economy. Substantial productivity growth was achieved during the early period (1964-76) and no substantial growth was discovered during the late seventies and the eighties.;Finally, we discussed the impact of government plans (or policies) and fuel price changes on productivity growth. The importance of subsidy was also explained.
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Type
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dissertation
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Source
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PQT Legacy CUNY.xlsx
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degree
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Ph.D.
