Friday, July 27, 2007

Reading Challenge IV

Today's selection: A Stochastic Production Frontier Model of the Newfoundland Snow Crab Fishery
Abstract:Since the collapse of the Newfoundland groundfishery in 1992, the snow crab fishery has become Newfoundland’s largest fishery, accounting for approximately half the value of total landings. This study uses trip log data to estimate the production frontier and the technical efficiency of this fishery using a Stochastic Frontier Analysis (SFA) methodology. The analysis is based on over 11,000 observations taken over a five-year period. The technical efficiency of the fishery is estimated to be at a level of fifty percent or less.

Commentary: It's Friday, so none of the obscenely long papers that populate the journals. Page inflation drives me up the wall to no end: Crick and Watson's 1951 article describing the nature of DNA took up three - 3 - pages. Most articles these days are 40 pages to make a small point. But I digress.

So, it's nice to know my econometrics isn't completely atrophied. (My statistics...well, another story). I found I could make sense of most, though I wouldn't want to have to boot up SHAZAM and write the code to estimate it. (SHAZAM 9 doesn't work on my Windows Vista, anyway, so it's a moot point - have to install ubuntu soon.)

Good to see I remember some things. Dummy variable trap, fixed-effects modelling, blah blah blah. Disclosure: The author of this paper was my professor for Econometrics II last term.

The one point I would contend with is not that technical efficiency is determined by 'skipper skill', but by consistent geographic factors. If one's outport has few snow crab - and nothing else to catch - you're likely to keep catching snow crab much less efficiently than people in better areas.

People don't move away from this, because in the Newfoundland fishery, contrary to many other fisheries, people fish to qualify for welfare payments, and not to support themselves outright. Ergo, we have a lower technical efficiency than were one cannot secure such generous handouts, e.g. Hawaii, where people cannot have a career on welfare.

The low efficiency of Malaysia can probably be explained by a more intense tragedy of the commons, since the standard of living is lower, so more people pile in, driving down the efficiency moreso than in OECD countries.

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