Group and individual heterogeneity in a stochastic frontier model : Container terminal operators

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

21 Scopus Citations
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Author(s)

  • Tsz Leung Yip
  • Xin Yu Sun
  • John J. Liu

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)517-525
Journal / PublicationEuropean Journal of Operational Research
Volume213
Issue number3
Publication statusPublished - 16 Sep 2011

Abstract

Container ports are a major component of international trade and the global supply chain. Hence, the improvement of port efficiency can have a significant impact on the wider maritime economy. This paper deconstructs a representation in the existing literature that neglects the heterogeneity of individual and group-specific terminal operators. In its place, we present a hierarchical model to make a connection between efficiency and terminal operator group characteristics. The paper develops a stochastic frontier model that controls not only individual heterogeneity but also group-specific variations. The model decomposes the total stochastic derivation from the frontier into inefficiency, individual heterogeneity, group-specific variations, and noise components, with the estimation being performed using Markov chain Monte Carlo simulations. The validity of the model is tested with a panel of container terminal operator data from 1997-2004. Our findings show that terminal operator groups are important in promoting terminal efficiency at the global level, and that the operators with stevedore backgrounds show a higher efficiency than carriers. © 2011 Elsevier B.V. All rights reserved.

Research Area(s)

  • Container terminal operators, Group-specific, Markov processes, Port globalisation, Stochastic processes, Stochastic production frontier