Estimating heterogeneous capacity and capacity utilization in a multi-species fishery

We use a stochastic production frontier model to investigate the presence of heterogeneous production and its impact on fleet capacity and capacity utilization in a multi-species fishery. We propose a new fleet capacity estimate that incorporates complete information on the stochastic differences between vessel-specific technical efficiency distributions. Results indicate that ignoring heterogeneity in production technologies within a multi-species fishery as well as the complete distribution of a vessel’s technical efficiency score, may lead to erroneous fleet-wide production profiles and estimates of capacity. Our new estimate of capacity enables out-of-sample production predictions which may be useful to policy makers.