Abstract
ALTHOUGH ENGINEERING COST FUNCTIONS ARE GENERALLY AVAILABLE FOR SEA TRANSPORT IN DRY BULK CARRIERS, THE AUTHORS USE AN ALTERNATIVE APPROACH TO COST FUNCTIONS, THAT IS, STATISTICAL ESTIMATION ON A BASIS OF MARKET DATA. THE INFLUENCE OF MARKET FORCES IS TAKEN INTO ACCOUNT IN THE MODEL. IN GENERAL IT WAS FOUND THAT THE RESULTS COMPARE WELL WITH COST ENGINEERING FUNCTIONS EXCEPT THAT THE EFFECT OF TRANSPORT DISTANCE ON FREIGHT RATES WAS CONSISTENTLY FOUND TO BE LOWER. THIS FINDING IS SAID TO HAVE IMPORTANT IMPLICATIONS FOR PORT INVESTMENT APPRAISAL. THE MODEL ALSO PROVIDES VALUES FOR PRICE ELASTICITIES OF SUPPLY TONNAGE.