Flores-Lagunes, Horrace study on efficient fishing vessels published in Journal of Applied Econ
Jun 30, 2007
Identifying Technically Efficient Fishing Vessels: A Non-empty, Minimal Subset Approach
Alfonso Flores-Lagunes, William C. Horrace & Kurt E. Schnier
Journal of Applied Econometrics, June 2007
Stochastic frontier models are often employed to estimate fishing vessel technical efficiency. Under certain assumptions, these models yield efficiency measures that are means of truncated normal distributions. The authors argue that these measures are flawed, and use the results of Horrace (2005) to estimate efficiency for 39 vessels in the Northeast Atlantic herring fleet, based on each vessel's probability of being efficient. They develop a subset selection technique to identify groups of efficient vessels at pre-specified probability levels. When homogeneous production is assumed, inferential inconsistencies exist between the authors' methods and the methods of ranking the means of the technical inefficiency distributions for each vessel. When production is allowed to be heterogeneous, these inconsistencies are mitigated.