Testing for Input Substitution in a Regulated Fishery

Input restrictions are commonly used to prevent rent dissipation in fisheries. This paper examines whether these schemes are successful by calculating the degree of input substitution between restricted and unrestricted inputs. Conventional elasticities of substitution cannot be used when the firm faces controls on the use of some inputs. In this case, the appropriate measure of substitution, the elasticity of intensity, must be used. Data from the British Columbia salmon fishery provide evidence of input substitution possibilities for two vessel types. These results call into question the usefulness of input control schemes.