We use a stochastic production frontier model to investigate the presence of heterogeneous production and its impact on fleet capacity and capacity utilization in a multi-species fishery. Furthermore, we propose a new fleet capacity estimate that incorporates complete information on the stochastic differences between each vessel-specific technical efficiency distribution. Results indicate that ignoring heterogeneity in production technologies within a multi-species fishery, as well as the complete distribution of a vessel’s technical efficiency score, may yield erroneous fleet-wide production profiles and estimates of capacity. Furthermore, our new estimate of capacity enables out-of-sample production predictions predicated on either homogeneity or heterogeneity modeling which may be utilized to facilitate policy.
Felthoven, Ronald G.; Horrace, William C.; and Schnier, Kurt E., "Estimating Heterogeneous Capacity and Capacity Utilization in a Multi-Species Fishery" (2006). Economics - Faculty Scholarship. 132.
Harvested from ssrn.com