A Switching Regime Approach to Measuring the Effects of Technological Change in Ocean Shipping

this study examines the dramatic change in production technology of the U.S. ocean liner shipping industry over the period 1971 through 1982 using panel data on 15 subsidized U.S.-flag liner firms. To estimate the changes in the production function due to the new technology, the switching regime method of Goldfeld and Quandt is applied to a translog variable profit function. Three regimes based on the proportion of the new technology reflected in a firm's fleet are identified. The constant returns to scale fleet size more than doubles across the three regimes.