CPR Working Paper Series No. 78
Identifying Technically
Efficient Fishing Vessels:
A Non-Empty, Minimal Subset Approach
Alfonso Flores-Lagunes,
William C. Horrace, and Kurt E. Schnier
Abstract:
There is a growing resource
economics literature, concerning the estimation of the technical efficiency
of fishing vessels utilizing the stochastic frontier model. In these
models, vessel output is regressed on a linear function of vessel inputs and
a random composed error. Using parametric assumptions on the regression
residual, estimates of vessel technical efficiency are calculated as the
mean of a truncated normal distribution and are often reported in a rank
statistic as a measure of a captain’s skill and used to estimate excess
capacity within fisheries. We demonstrate analytically that these measures
are potentially flawed, and extend the results of Horrace (2005) to estimate
captain skill for thirty nine vessels in the Northeast Atlantic herring
fleet, based on homogenous and heterogeneous production functions within the
fleet. When homogenous production is assumed, we find inferential
inconsistencies between our methods and the methods of ranking the means of
the technical inefficiency distributions for each vessel. When production is
allowed to be heterogeneous, these inconsistencies are mitigated.
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