Value migration: digitalization of shipping as a mechanism of industry dethronement

In this conceptual paper, we review latest developments related to unmanned vessels and sketch potential scenarios that implicate with the existing maritime industry structure. On the one hand, we isolate a range of challenges that make the imminent realization of unmanned vessels seem like a rather utopian pursuit. On the other hand, we explain the reasons that may catalyse their emergence. Inspired by these opposing tensions, we highlight that the digital transformation of the shipping industry has the potential to enhance value within the industry’s ecosystem. However, we also contend that unmanned vessels -if realized- pose a very particular threat to the identity of the shipping industry as we know it. In particular, we build upon the concept of value migration and we highlight the drastic existential changes that may likely stem from a shift to non-seafarer-centric shipping. We conclude with questions that matter for industry dethronement purposes i.e., the possibility that existing industry structures may be substantially reconfigured following a removal of the seafarer as the nucleus of value creation in shipping

Sunk costs, extensive R&D subsidies and permanent inducement effects

Using firm-level data on Spanish manufacturing firms we estimate a model of the firm's optimal R&D decisions (whether to perform R&D and how much to invest). We quantify the fixed (proper fixed costs plus firms' outside option) and sunk costs of R&D and find the former to be substantially higher than the latter. While sunk costs act as a barrier to entry into R&D for some firms, fixed costs are the binding obstacle for many more firms. Simulation based on the estimated model reveals that one-shot trigger subsidies cause a substantial increase in both the share of R&D firms and average R&D expenditures. This effect shows persistence over time, but totally fades away after seven years as firms are gradually hit by negative R&D profitability shocks