Q2 Z2,(Q2) Z2(Q2) - Institute for Water Resources - U.S. Army

with the use of dummy variables. Towboat ages were grouped into five
year intervals. A dummy variable was assigned to each group. In the
regression the dummy variable for the newest boats was excluded. If
our age hypothesis is correct, the coefficients of the remaining dummy
variables should all be positive.
Other characteristics of the towboat most certainly will affect
cost in some way. Some features, such as the extent of automation in
the engine operation will affect cost directly by reducing the amount.
. of the labor input and hence wage cost (there will of course be an
increase in cost for the capital input). Other features., such as elec-
tronic guidance equipment, will serve to improve the average performance
of the boat and lower cost for any given output. Most of these factors
are extremely hard to quantify and-have not been included in the statis-
tical model. Information on one feature, the Kort nozzle, is available
and has been included in the analysis. The Kort nozzle is a tunnel
which surrounds the towboat's - propellers and creates a channel through
which the water is propelled. Its purpose is to reduce power loss due
to turbulence and thus improve performance. Its effect on cost is of
interest since some controversy among naval architects surrounds its use.
The presence of Kort nozzles on a boat in our sample is denoted by a
dummy variable. If the Kort nozzle does perform as expected we would
expect the dummy variable associated with its presence to have a nega-
tive sign. .
The second dominant feature of towboat operations is the operating
environment provided by the waterway. The physical characteristits of
the waterway (depth, width, stream flow) affect the speed at which a
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