The Grouping Policy in Japan’s Coastal Shipping Market

This study aims to analyze the market structure of the coastal shipping industry in Japan. Based on 153 observations using balanced panel data for the period 2000–2016, we estimate the market-wide cost function and total factor productivity (TFP) growth rate, and then provide some policy implications from the results. We also estimate the long-term total cost function and analyze the economies of scale and the TFP growth rate. The results indicate that the grouping policy is conducive to achieving economies of scale. Hence, we conclude that it is worth continuing the grouping policy for the benefits it provides in terms of management efficiency