Short-Run Johansen Frontier-Based Industry Models: Methodological Refinements and Empirical Illustration on Fisheries

This contribution focuses on extending the current state of the art in the short-run Johansen industry model in two ways. First, instead of only considering output-oriented plant capacity, we allow for alternative plant capacity concepts. In particular, we introduce an input-oriented plant capacity concept, and an alternative attainable outputoriented plant capacity concept that corrects a major empirical issue in the traditional output-oriented plant capacity notion. Second, we correct a long-standing issue of the correct choice of weight variables on the capacity distribution by guaranteeing that these weights determine production combinations that belong to the production technology on which the plant capacity estimates are based in the first place. These double methodological refinements are illustrated with a data set on U.S. fishing vessels by developing a planning model to curb overfishing.