Stochastic Production And Heterogeneous Risk Preferences: Commercial Fishers' Gear Choice
As long as total effort cannot be completely controlled, a more thorough understanding of fishers' supply response decisions will be beneficial for fisheries managers. In this paper, we present a model of fishers' gear choice, which is empirically estimated on a panel of Swedish demersal trawlers. The approach allows for heterogeneity both in production technology and in risk preferences. Stochastic revenue functions with fixed effects are estimated and used to predict expected revenue and standard deviation for each trip. We employ a linear utility function in the mean-standard deviation framework and then analyze the gear choices, using the predicted values together with vessel capacity and lagged variables for the previous trip in a random parameters- logit model, which allow for heterogeneous preferences. The results indicate that fishers have a strong tendency to choose the same gear used on the previous trip, while in general they react to changes in economic and biological conditions by responding positively to increases in expected landing and negatively to increases in the variability of the expected landing values, indicating risk aversion.
|Date of creation:||2001|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sean Pascoe & Louisa Coglan, 2002. "The Contribution of Unmeasurable Inputs to Fisheries Production: An Analysis of Technical Efficiency of Fishing Vessels in the English Channel," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 585-597.
- Eggert, Håkan, 2001. "Technical efficiency in the Swedish trawl fishery for Norway lobster," Working Papers in Economics 53, University of Gothenburg, Department of Economics.
- Just, Richard E. & Pope, Rulon D., 1978. "Stochastic specification of production functions and economic implications," Journal of Econometrics, Elsevier, vol. 7(1), pages 67-86, February.
- Harvey, A C, 1976. "Estimating Regression Models with Multiplicative Heteroscedasticity," Econometrica, Econometric Society, vol. 44(3), pages 461-65, May.
- Sinn, Hans-Werner, 1989.
"Two-Moment Decision Models and Expected Utility Maximization: Comment,"
Munich Reprints in Economics
19848, University of Munich, Department of Economics.
- Sinn, Hans-Werner, 1989. "Two-Moment Decision Models and Expected Utility Maximization: Comment," American Economic Review, American Economic Association, vol. 79(3), pages 601-02, June.
- Johan A. Mistiaen & Ivar E. Strand, 2000. "Location Choice of Commercial Fishermen with Heterogeneous Risk Preferences," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1184-1190.
- Weitzman, Martin L., 2002. "Landing Fees vs Harvest Quotas with Uncertain Fish Stocks," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 325-338, March.
- Chintagunta, Pradeep & Kyriazidou, Ekaterini & Perktold, Josef, 2001. "Panel data analysis of household brand choices," Journal of Econometrics, Elsevier, vol. 103(1-2), pages 111-153, July.
- Kenneth E. Train, 1998. "Recreation Demand Models with Taste Differences over People," Land Economics, University of Wisconsin Press, vol. 74(2), pages 230-239.
- Barry T. Coyle, 1999. "Risk Aversion and Yield Uncertainty in Duality Models of Production: A Mean-Variance Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 553-567.
- Meyer, Jack, 1987. "Two-moment Decision Models and Expected Utility Maximization," American Economic Review, American Economic Association, vol. 77(3), pages 421-30, June.
- Smith, Vernon L, 1971. "Economics of Production from Natural Resources: Reply," American Economic Review, American Economic Association, vol. 61(3), pages 488-91, June.
- Levy, Haim, 1989. "Two-Moment Decision Models and Expected Utility Maximization: Comment," American Economic Review, American Economic Association, vol. 79(3), pages 597-600, June.
- Herriges, Joseph A. & Kling, Catherine L., 1999. "Valuing Recreation and the Environment: Revealed Preference Methods in Theory and Practice, New Horizons in Environmental Economics," Staff General Research Papers 12330, Iowa State University, Department of Economics.
- Bo E. Honoré & Ekaterini Kyriazidou, 2000. "Panel Data Discrete Choice Models with Lagged Dependent Variables," Econometrica, Econometric Society, vol. 68(4), pages 839-874, July.
- Bar-Shira, Ziv & Finkelshtain, Israel, 1999. "Two-moments decision models and utility-representable preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 38(2), pages 237-244, February.
- David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
- Daniel S. Holland & Jon G. Sutinen, 2000. "Location Choice in New England Trawl Fisheries: Old Habits Die Hard," Land Economics, University of Wisconsin Press, vol. 76(1), pages 133-149.
- Bockstael, Nancy E. & Opaluch, James J., 1983. "Discrete modelling of supply response under uncertainty: The case of the fishery," Journal of Environmental Economics and Management, Elsevier, vol. 10(2), pages 125-137, June.
- Dupont, D.P., 1993. "Price Uncertainty,Expectations Formation and Fishers' Allocation Choice," Working Papers 1993-1, Brock University, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea01:20671. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.