Seafood Processing Capacity in Commercial Fisheries Management: Discussion

Abstract

ambiguous and confusing economic concept in the context of one of the most complex of industry environments. In the space and time allotted, he has touched on a wide range of important issues and a number of interpretations of capacity. If I have a major disagreement with his paper, it is in terms of focus. In responding to the Fisheries Conservation and Management Act, the contribution economists have to make is in clearly defining the informational and analytical needs of managers to carry out the bill's spirit and intent, rather than exercising blind compliance with the language. If we are not careful to do this at the outset, we shall find ourselves pursuing irrelevant analysis and endless data searches. I make this point, because I advocate sidestepping the issue of actually measuring capacity. Consider that much quoted passage from PL 94-265: Any fishery management plan ... shall assess and specify the capacity and the extent to which fishing vessels of the United States, on an annual basis, the yield. It is the amount of the total allowable catch of each species which U.S. firms will harvest that is in question. Consequently, economists should focus on predicting shortand long-run supply response by relating them to observable economic and individual sociological variables rather than on trying to measure and add up capacity figures. By supply response, I refer to utilization of existing capital: decisions regarding number of days spent fishing and allocation of those days among alternative species or fisheries. I also refer to changes in the size and number of vessels owned by firms and exit and entry of firms in fisheries. It would seem that Prochaska and I are in agreement conceptually if not in terminology. He argues that physical capacity measures, at least in the harvesting sector, are not very useful. I agree, since fishermen depend on finite biological stocks, face no restrictions on entry at present, and are free to transfer vessels between fisheries. In this milieu, physical capacity (maximum hold capacity times maximum number of trips, summed for all vessels) can never be expected to be a binding constraint. Additionally, Prochaska acknowledges the importance of understanding changes in capacity rather than simply counting it and recognizes that market conditions are important in determining levels of capacity and capacity utilization for the firm. Surely this sounds like a conceptual approach consistent with longand short-run supply response. In the final sections of the paper, however, Prochaska discusses optimum capacity and capacity utilization in a different context. The discussion is not at all consistent with the supply-response concept. The use of the term optimum in the different sections of the paper is confusing, but the distinction between its two uses and the choice between them must be made carefully for economists to focus on the correct informational and analytical requirements. Clearly, if economists are going to have anything to say about the behavior of economic agents, we must assume that they are rational profit maximizers, given their time preference and institutional and informational constraints. However, a firm's optimal behavior can be expected to differ from the prescribed by economically efficient resource management for a number of reasons. The most obvious source of this divergence is the problem associated with the absence of property rights in the fishery. Other sources are the differences in time preference, as well as risk aversion, which are likely to exist between Nancy E. Bockstael is an assistant professor in the Resource Economics Department, University of Rhode Island. Contribution No. 1813 of the Rhode Island Agricultural Experiment Station.