Productivity Change and Economies of Scale in Container Port Terminals<BR> A Cost Function Approach

The objective of this paper is to chart the productivity of Spanish port terminals, which are private firms under concession and can be regarded as representative of medium size firms worldwide so as to evaluate the effects of different regulatory reforms applied in the 1990s. We perform a productivity analysis using a cost model that employs a quadratic cost function and discrete data in a multioutput framework for three terminals in the port of Las Palmas. We decompose a productivity index into technical change and the effect of the variations in the scale of production. The results show important productivity gains explained mainly by scale effects. © 2010 LSE and the University of Bath