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The purpose of this paper is to investigate the impact of shipyard and shipowner heterogeneity on the price formation for individual newbuilding contracts.

The model controls for the shipbuilding market cycle, input costs, firm size, yard experience and contract-specific variables and captures the impact of yard and owner heterogeneity in fixed-effects regressions. The data sample contains contract information on 3,759 tankers, bulkers and container vessels constructed at 77 shipyards between 1990 and 2014.

Although the newbuilding price benchmarks (market conditions) and gross domestic product per capita (salary costs) are influential covariates, the main conclusion is that shipyards and, particularly, shipowners play an influential role on the US$ per Compensated Gross Tonnage price level in individual contracts.

The paper represents the first study of the impact of buyer and seller heterogeneity at the micro level in the shipbuilding market.