Working Paper: NBER ID: w4194
Authors: Lain Cockburn; Murray Frank
Abstract: The endogeneity of capital retirements is studied for the particular case of oil tankers from 1979--1989. A model is estimated to examine the effect of changes in market conditions on the price and scrappage of tankers. Energy price rises had a major impact on the value of ships and on which ships were scrapped. A simple model is able to account for many features of the market. We use the information implicit in second-hand prices to ease the computational burden for the model that is estimated.
Keywords: capital retirement; oil tankers; market conditions; energy prices; depreciation
JEL Codes: D24; L92; Q41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Energy price increases (Q41) | Increased operating costs and decreased demand for tanker services (L93) |
| Increased operating costs and decreased demand for tanker services (L93) | Scrapping decisions (D87) |
| Energy price increases (Q41) | Scrapping decisions (D87) |