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Methodological Reflections On The Short-Run Johansen Industry Model In Relation To Capacity Management, Kristriaan Kerstens, Dale Squires, Niels Vestergaard Dec 2004

Methodological Reflections On The Short-Run Johansen Industry Model In Relation To Capacity Management, Kristriaan Kerstens, Dale Squires, Niels Vestergaard

Niels Vestergaard

The specification of a convex production technology is a potential issue in estimating firm-level Johansen plant capacity utilisation rates and their subsequent use in the short-run Johansen industry capacity model of the fishery. There are different plant capacity utilisation estimates with convex and nonconvex technologies. When entered as parameters in the short-run Johansen industry model, this leads to different distributions in the activity vectors. With non-convex technology, more vessels remain active in the fleet, and there is no longer an overestimation of the number of decommissioned vessels compared to the use of a convex technology. A second methodological reflection involves ...


Fishing Capacity In Europe: Special Issue Introduction, Niels Vestergaard Dec 2004

Fishing Capacity In Europe: Special Issue Introduction, Niels Vestergaard

Niels Vestergaard

No abstract provided.


Sunk Cost And Entry-Exit Decisions Under Individual Transferable Quotas: Why Industry Restructuring Is Delayed, Niels Vestergaard, Frank Jensen, Henning P. Jørgensen Dec 2004

Sunk Cost And Entry-Exit Decisions Under Individual Transferable Quotas: Why Industry Restructuring Is Delayed, Niels Vestergaard, Frank Jensen, Henning P. Jørgensen

Niels Vestergaard

The paper shows that explicit modelling of sunk cost and a firm's entry-exit decision in a traditional deterministic investment model may give an explanation of the slow transition to the optimal fleet structure following the introduction of individual transferable quotas (ITQs). The analysis shows that the annual lease unit price of quota may be in a range where the long-run fieet structure will not be attainable at once. Over time, firms with zero gross investment as optimal behavior may leave the industry as the capital decays and over the transition period the optimal fieet structure prevails.