Assessing Changes in Capital and Investment as a Result of Fishing Capacity Limitation Programs

This paper provides a framework to evaluate the effectiveness of the European Multiannual Guidance Programmes on capacity limitation based on the evolution of the prices of used fishing vessels and on the measures of capital and investment derived from the estimation of a hedonic price function related to vessels characteristics. Attention is paid not only to the correct specification of the numerical variables but also, to testing for sample selection bias, to checking for structural change, to analysing the convenience of using alternative estimation methods and to discussing the potential bias as a result of asymmetric information in the used markets. The application of this framework to the Basque fleets evidences clear and coincident signs of successful adjustment after MAGP₃, but also a substantial investment in the next periods as a result of the modernisation of the fleets.