Mitigating simultaneity bias in seaport efficiency measurement

Seaport efficiency measurement is one of the most popular topics in maritime economics. Studies within this research area have not paid attention to the well-known simultaneity bias in productivity and efficiency measurement that can lead to inconsistent estimates of best practices. This paper investigates simultaneity in seaport efficiency measurement and proposes a novel strategy to mitigate the bias by exploiting the relationship between port efficiency and choice, another key topic within the maritime literature. A non-parametric framework for joint estimation of production and control functions subject to shape constraints is further developed. Contrary to comparable methods for controlling for simultaneity, the new method does not require multiple steps and rigorous assumptions about the error term to retrieve the port production function. An empirical investigation is provided for the eight largest container ports in Norway to showcase presence and mitigation of simultaneity bias in efficiency analysis of seaports.