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Economies of scale and scope in service firms with demand uncertainty: An application to a Spanish port

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  • Beatriz Tovar

    (Departamento de Análisis Económico Aplicado, Universidad de las Palmas de Gran Canaria, Campus de Tafira, Modulo D, Despacho 2.20., Las Palmas de Gran Canaria 35017, Spain.)

  • Alan Wall

    (Oviedo Efficiency Group (OEG), Departamento de Economía, Universidad de Oviedo, Avenida del Cristo s/n, Oviedo 33071, Spain.)

Abstract

Although shipping companies assert that the majority of their lines work to a schedule with fixed days of arrival and departure which are programmed on a weekly basis, the demand which container terminals face is characterized by a degree of uncertainty. Up to now, the analysis of cargo handling port activities has given little attention to the relationship between demand variability and firm costs. We analyse how demand uncertainty affects input choices and therefore costs of production. Our results show that demand uncertainty affects port terminal marginal cost and has the effect of increasing the estimates of economies of scale and scope. We conclude that not taking demand uncertainty into account may yield misleading estimates of terminal costs and lead to the wrong conclusions for optimal policy design.

Suggested Citation

  • Beatriz Tovar & Alan Wall, 2012. "Economies of scale and scope in service firms with demand uncertainty: An application to a Spanish port," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 14(3), pages 362-385, September.
    • Handle: RePEc:pal:marecl:v:14:y:2012:i:3:p:362-385
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    Cited by:

    1. Xuliang Zhang & Chenxiang Elaine Ji & Haixia Zhang & Yuchen Wei & Jianwei Jin, 2023. "On the Role of the Digital Industry in Reshaping Urban Economic Structure: the Case of Hangzhou, China," Journal of Economic Analysis, Anser Press, vol. 2(4), pages 123-139, July.
    2. Tovar, Beatriz & Wall, Alan, 2014. "The impact of demand uncertainty on port infrastructure costs: Useful information for regulators?," Transport Policy, Elsevier, vol. 33(C), pages 176-183.
    3. Angelos Pantouvakis & Evangelos Psomas, 2016. "Exploring total quality management applications under uncertainty: A research agenda for the shipping industry," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 18(4), pages 496-512, December.
    4. Tichavska, Miluše & Tovar, Beatriz & Gritsenko, Daria & Johansson, Lasse & Jalkanen, Jukka Pekka, 2019. "Air emissions from ships in port: Does regulation make a difference?," Transport Policy, Elsevier, vol. 75(C), pages 128-140.
    5. Chang, Víctor & Tovar, Beatriz, 2014. "Drivers explaining the inefficiency of Peruvian and Chilean ports terminals," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 67(C), pages 190-203.
    6. Olalekan Usiobaifo Asikhia, 2016. "SMEs, Wealth Creation and Poverty Alleviation in Nigeria," Journal of Economics and Behavioral Studies, AMH International, vol. 8(4), pages 17-31.
    7. Tovar, Beatriz & Hernández, Rubén & Rodríguez-Déniz, Héctor, 2015. "Container port competitiveness and connectivity: The Canary Islands main ports case," Transport Policy, Elsevier, vol. 38(C), pages 40-51.
    8. Chang, Víctor & Tovar, Beatriz, 2014. "Efficiency and productivity changes for Peruvian and Chilean ports terminals: A parametric distance functions approach," Transport Policy, Elsevier, vol. 31(C), pages 83-94.

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