Port economic cost functions: A service perspective

• Ports provide services rather than producing physical products.
• Functional form of port economic cost functions in literature is problematic.
• Distinguishes port multi-product/multi-service economic non-joint and joint cost functions.
• Derives first port multi-service long-run economic joint cost function.
• Quality-of-service measures for port cargo, vessel and vehicle services are provided.

Ports provide services rather than producing physical products. However, port cost functions specify port cost as functions of physical products, e.g., port cargo throughput long-run cost is a function of port resource prices and cargo throughput (a physical product). In comparison, port cargo service long-run cost is a function of port resource prices, cargo service and shipper cargo received. The shipper provides cargo that is serviced by the port. A service cannot be touched and its user is involved in its provision. This paper derives port cost functions for which port outputs are “service outputs”, e.g., cargo, vessel and vehicle services.