Equilibrium in the maritime transport market between the established flag sector and the flag of convenience sector is explained by reference to comparative levels of efficiency and the real cost of labour. The established flag sector would increase if it could reduce its labour costs, especially the non-wage element.

There is little integration of shipping with production; the few instances accord with the institutional theory of the firm. The variety and flexibility of shipping contracts give many of the advantages of vertical integration without its costs.

A case study shows that investment in shipping is profitable for Israel and makes net contribution of about 25 per cent to the balance of payments. Investment is most profitable in second-hand ships about 10 to 13 years old.