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Trans. Planning Journal
| Title | Analysis of Dynamic Equilibrium and System Stability for the International Tramp Shipping Market－Application of Optimal Control Theory |
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| Author | Wei-Ming Wu, Chun-Hsien Chou |
| Summary | By applying the optimal control theory, in this paper, a dynamic economic model reflecting the inter-connected activities among new-building, secondhand, scrapping and freight markets has been developed to demonstrate the dynamic equilibrium and stability of system convergence in the international tramp shipping market. By satisfying the steady state conditions in ship and freight markets, the model developed in this paper has definitely shown that the international shipping market is a stably convergent equilibrium market, regardless of the saddle point equilibrium outcome presented in the Beenstock model. By following the outcome of linearization stability analysis which focuses on investigating the local stability around the neighboring area of the equilibrium point, the model suggests that the rate of scrapping and rate of chartering ships have played critical roles in determining the adjustment speed and the path of recovering from the disequilibrium point to the equilibrium point. As the scrapping rate is more sluggish to the freight variations, the recovery of the shipping market disequilibrium will become more stable and quick to adjust back to its equilibrium. This paper has also illustrated that the fright level and stock of ships may have presented an overshot response to the market shock, even if the necessary condition of rational expectation to ship price formulated in the Beenstock model is not applied in this model. By following the comparative static analysis, furthermore, the model has also shown that the increase in new ships delivered will bring a negative effect on the optimal equilibrium freight level, but an ambiguous effect on the optimal stock of ship. In contrast, the increase in fuel price and transportation demand will increase the optimal freight level and stock of ship. |
| Vol. | 38 |
| No. | 2 |
| Page | 201 |
| Year | 2009 |
| Month | 6 |
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