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SYSTPMS  A.NALYSIS   OF  U.S.    I-I/u^AGEMENT   STRATEGIES 
IN  TKE  GULF   OF  MEXICO   SHRIl-iP    INDUSTRY 


By 

PAUL  JEROME  HOOKER 


A  DISSERTATION  PRESENTED  TO  THE  GRADUATE  COUNCIL  OF 

THE  UNIVERSITY  OF  FLORIDA 
IN  PARTIAL  FULFILU-IENT  OF  THE  REQUIREMENTS  FOR  THE 
DEGREE  OF  DOCTOR  OF  PHILOSOPHY 


UNIVERSITY  OF  FLORIDA 
1972 


UNIVERSITY  OF  FLORIDA 


3  1262  08552  4485 


Copyright  by 

Paul  Jerome  Hooker 

1972 


FOR  KERRY 


ACKITOVTLEDGMEIH'G 

My  debt  of  gra^.itud£  for  assistance  during  my  graduate  career 
exceeds  my  ability  to  provide  acltnowledgment .   I  tru.tit  that  my  many 
unrecognised  benefactors  will  forgive  vie   fc-i  ciLiug  ori].y  a  fe\':  of  the 
debts  that  I  perceive  to  be  the  greatest. 

The  greatest  debt  should  be  acknov;ledged  first.  Mine  is  duo  ray 
wife,  Martha,  for  her  moral  support  during  my  graduate  career  and  uiy 
young  daughter,  Kerry,  for  making  that  career  vrorthwhile, 

Leo  Polopolus  has  served  as  Chairman  of  my  Supervisory  Conmittee, 
academic  and  professional  advisor,  and  friend.   Max  II.  Lar.gham  has  pro- 
vided good  advice  during  my  graduate  career  and  liis  thorough  reviews  of 
my  dissertation  research  materials  have  been  invaluable.   W.  W.  McPherscn 
has  provided  a  X'/ellspring  of  experience  from  v/hich  I  have  freely  drawn 
as  a  student  and  as  author  of  this  dissertation.   C .  C.  Osteibind 
brought  the  expertise  of  an  economist  with  experience  in  the  Gulf  of 
Mexico  shrimp  industry  to  bear  in  his  revicvj  of  the  dissertation  manu- 
script.  For  these  contributions,  as  well  as  many  left  unmenticned,  I 
wish  to  thank  the  members  of  my  Supervisory  Comnuttee. 

I  wish  to  thank  K.  R.  Tefertiller,  Chairman  of  the  Department  of 
Food  and  Resource  Economics  of  the  University  of  Florida,  for  providing 
financial  assistance  during  the  course  of  research  on  this  project.   In 
addition,  I  wish  to  acknowledge  departmental  support  of  the  project 
which  allowed  use  of  the  facilities  of  the  University  of  Florida 
Computing  Center. 

iv 


Mrs.  Cindy  Bass,  with  the  picLovinl  aid  oi=  Mrs.  Pntti  Fesmlre,  has 
accomplished  the  transrorm^tion  of:  this  dissertation  from  a  longhand 
manuscript  into  its  present  form.   For  this  feat  she  has  earned  my 
gratitude  and  admiration  of  her  considGrable  ability. 


TABLE  OF  CONTENTS 

Page 

ACKNOWLEDGl-IENTS iv 

LIST  OF  TABLES viii 

LIST  OF  FIGURES  .  .  .  .' x 

ABSTRACT xi 

CHAPTER  I 

INTRODUCTION  1 

CHAPTER  II 

BIOECONOMIC  THEORY  3 

Fish  Population  Theory   3 

A  Theory  of  Open  Access  and  Common  Property 

Resource  Exploitation  17 

Bioeconomic  Theory  of  a  Fishery  33 

CHAPTER  III 

GULF  OF  MEXICO  SHRIMP  INDUSTRY:  DESCRIPTION  AND  MODEL   ...  38 

Description  of  the  Industry 38 

The  Gulf  Shrimp  Resource 38 

The  Gulf  Shrimp  Fleet 46 

Processing  and  Marketing  the  Gulf  Shrimp  Catch  .  .  56 

A  Model  of  the  Gulf  Shrimp  Industry 58 

A  Model  of  the  Gulf  Shrimp  Resource 59 

A  Model  of  the  Gulf  Shrimp  Fleet 62 

A  Model  of  the  Marketing  and  Demand  Sector  of 

the  Gulf  Shrimp  Industry 69 

CHAPTER  IV 

METHODOLOGY  AND  DATA 73 

Simulation  as  a  Tool  for  Model  Building  and  Policy 

Evaluation 74 

Data 84 

The  Computer  Program   95 

vi 


TABLE  OF   C01;TEvyi'S--Con!:irnied 

r?.ge 

CllArTKR  V 

RESULTS   OBTAINED  WITH  THE   SIi-lLlLATIOi>I  MODEL  Ai'i)  POLICY 

IMPLICATIONS '^'' 

Model  Validation -^^ 

Simulated  P.csults  for  the  Policies  Con:;.ldf:rv-f] 11''; 

Policy  Implications -'-^^ 

CHAPTER  VI 

RECAPITULATION  OF  THE  PPESENT   STUDY   WITH   SUGGESTIONS   FOR 

Iffl'ROVEMENTS  /Mv'D  FURTHER  WOPvK 130 


APPENDIX  I   

APPENDIX  II  

LIST  OF  REFERENCES  . 
ADDITIONAL  REFERENCES 
BIOGRAPHICAL  SKETCH  . 


15! 


Recapitulation  of  Objectives  and  Evaluation  of 

Achievements   •  • 

Improvements  Needed  in  the  Present  Model  snd  Suggest ionb 

for  Further  Work ^^^ 


134 
1^)8 
180 
183 
185 


vli 


LIST  UF  TABLES 


Table  Page 

3.1.  Landings  of  Gulf  slirimp  by  area  and  specicF!  for  the  years 

1967,  1968,  and  1969 *. 41 

3.2.  Percentage  distribution  of  Gulf  shritnp  landings  by  area 

and  species  for  the  years  1967,  1968,  and  1969  ...    43 

3.3.  Average  landings  and  percentage  distribution  of  average 

landings  of  Gulf  shrirap  by  area  and  species  over  the 
years  1967,  1968,  and  1969 44 

3.4.  Summary  of  shrimp  otter  trawl  boats,  vessels,  fishermen, 

and  gear  in  the  Gulf  states,  1966 47 

3.5.  Summary  of  shrimp  otter  travel  vessels  of  the  Gulf  states, 

by  tonnage  groups,  1966 51 

3.6.  Marine  economics  data  -  65  foot  Gulf  of  Mexico  shrimp 

vessels 53 

4.1.  Age  (in  months  of  4.33  weeks  each)  distribution  by  size 

and  sex  of  brown,  pink,  and  white  shrimp  in  the  Gulf 

of  Mexico 86 

4.2.  Coefficients  to  convert  24-hour  days  fished  to  fishing 

mortality  and  estimated  square  nautical  miles  fished 

by  area 87 

4.3.  Vessel  size  classes  and  sweep  capacity  of  nets  along 

headrope  in  hundreds  of  feet 89 

4.4.  Mean  24-hour  days  fished  per  month  by  a  vessel  in  each 

size  class 90 

4.5.  Factors  to  adjust  days  fished  by  a  vessel  in  a  size 

class  to  reflect  variations  in  average  days  fished 

by  vessels  in  different  areas   91 

4.6.  Number  of  vessels  in  each  size  class  estimated  to  have 

home  ports  in  each  area  and  number  of  vessels  in 

each  size  class  assumed  to  be  fishing  in  each  area 

in  December  of  a  typical  year 93 

4.7.  Reduced  form  coefficients  for  quarterly  shrimp  model, 

1956-1967 94 


viix 


LIST  OF  TABLES— Contiriued 


Table  Page 

5.1.  Adjusted  coefficients  to  convert  24--hour  days  fished  to 

fishing  mortality  and  factor?  (APFACJ's)  by  which 
initial  estimates  of  the  mean  number  of  shrimp 
recruits  were  multiplied  for  final  use  in  the 
model 99 

5.2.  Size  composition  of  actual  shrimp  catches  in  the  Gulf 

and  South  Atlantic  states  for  the  years  196A-1970 

and  average  size  composition  of  thirty  years  catch 

data  generated  by  the  computer  model 101 

5.3.  Simple  correlation  coefficients  between  selected  vari- 

ables based  on  values  generated  by  the  computer 

model 3  06 

5.4.  Comparison  of  percentage  distribution  of  effort  by  area 

in  each  month  of  the  year  of  sample  vessels  with  the 
percentage  allocation  generated  by  the  computer 
model  in  the  30th  year  for  vessels  (vessel  size 
classes  2-5) 109 

5.5.  Comparison  of  percentage  distribution  of  effort  among 

aggregated  areas  in  eacli  month  of  samiple  vessels 

with  the  allocation  geiierated  by  the  model 110 

5.6.  Annual  fixed  cost  charges  per  vessel  employed  by  the 

computer  model  and  the  capitalized  values  that 

these  sums  represent 113 

5.7.  Value  of  the  fleet  under  different  assumptions  about 

average  life  of  vessel  and  gear  and  using  values 

given  in  [1] 115 

5.8.  Average  annual  returns  from  the  Gulf  shrimp  catch,  costs 

to  the  industry  and  fixed  investment  in  the  industry 
assuming  a  five  year  investment  life  under  various 
settings  of  the  policy  variables   118 

5.9.  Rate  of  return  to  fixed  investment  in  the  Gulf  shrimp 

fleet  under  various  settings  of  the  policy 

variables 119 

5.10.  Changes  in  average  annual  returns,  costs,  and  investment 

occasioned  by  the  imposition  of  controls   120 

5.11.  Average  annual  total  production  costs  incurred  by  the 

Gulf  of  Mexico  shrimp  fleet  per  pound  of  shrimp 
produced  and  average  annual  wholesale  price  of  shrimp 
produced  and  average  annual  wholesale  price  under 
alternative  policies   124 

ix 


LIST  or  FIGURES  i 

Page 

Curves  Describing  the  Population  DyaainicG  of  a  Single 

Year-Class  Within  a  Fishery -• 

Major  Shrimp  Fishing  Areas  in  the  Gulf  of  Mexico   ....   AO 

Shrimp  Vessel  with  Otter  Traul  Nets  Deployed   .   49 

Shrimp  Processing  and  Marketing  Channels   57 

Schematic  Representation  of  a  Framework  for  Validation 

of  Simulation  Models ""^ 

4.2.     Flow  Diagram  of  the  Computer  Model  of  the  Gu!!  f  of 

Mexico  Shrimp  Industry   ■   ^6 

5.1.  Annual  Values  Generated  by  the  Computer  Model  for 

Wholesale  and  Ex-vessel  Prices,  Total  Landings, 

Imports,  and  Effort  in  Adjusted  Days  Fislied 104 

5.2.  Annual  Values  Generated  by  the  Computer  Model  for  Total 

Production  Costs,  Adjusted  Days  Fished,  Value  of 
the  Fleet  Assuming  a  Fixed  Year  Investment  Life  and 
Net  Return 


Figure 

2.1. 

3.1. 

3.2. 

3.3. 

4.1. 

5.3. 


Simple  Correlation  Coefficients  Between  Selected 

Variables  Based  on  Values  Generated  by  tha  Computer 
Model  


105 


108 


Abstract   of   Dissertation  Presented    to   th? 
Grfjdu;,>te   Council  of   the  University   of   Florida   in  Partial  fulf i.llr.cnt 
of   the   Raquireincnts    for   the  Degree  of   Doctor   of   Philosophy 


SYSTEMS  /J\ALYSIS   OF   U.S.    MAIvlAGEi-IENT   STRATEGIES 
IN  THE  GULF   OF  MEXICO   RHRBIP   IOTjUSTRY 


By 


Paul  Jerome  Hooker 

March,  1972 

Chairman:   Leo  Polopolus 

Major  Department:   Food  and  Resource  Economics 

The  shrimp  resource  is  an  open  access  resource.   Except  for  r.itua-- 
tions  attributable  to  territorial  waters,  the  shrimp  resource  is  open 
to  exploitation  by  anyone  possessing  the  physical  capability  to  exploit 
it.   A  priori  theoretical  reasoning  suggests  that  the  economic  return 
attributable  to  the  shrimp  resource  as  a  productive  input  will  be  dis- 
sipated so  long  as  it  retains  an  open  access  status.   A  problem  of 
immediate  practical  importance  is  to  determine  the  extent  of  dissipa- 
tion of  the  returns  to  the  shrimp  resource  in  its  open  access  status 
and  the  relative  efficiency  of  different  institutional  schemes  in 
capturing  this  return. 

The  first  objective  of  this  study  was  to  determine  the  responses 
of  individual  fishing  firms  in  the  Gulf  of  Mexico  shrimp  industry  and 
the  resultant  aggregate  effect  for  the  industry  to  changes  in  the  shrimp 
population  in  the  Gulf  of  Mexico,  technological  conditions  of  harvesting 

xl 


and  processing,  and   demand  coiiditj.ons .   A  second  ob3Cc!.i\e  was  to 
deteriiiine  whether  a]  tP)  native  nanageraent  strcitegies  exist  which  will 
improve  industry  effiiciency  in  a   social  sense,  reducing  overinve.stiv.ent 
and/or  the  extent  of  non-optimal  husbandry  practices  that  occur  as  a 
result  of  the  free  use  of  a;i  open  access  resource. 

A  theory  of  the  basic  resource  was  developed  to  describe  tlie  behav- 
ior of  a  particular  year-c]ass  in  a  fishery  ovor  time  in  teims  of  growth 
in  Vi'eight,  recruitment  patterns,  and  natural  and  fishing  mortality 
rates.   An  economic  theory  of  exploitation  of  an  open  r.ccess  resource 
was  developed  and  the  divergency  between  behavior  that  is  optimal  for 
the  industry  as  a  whole  and  the  behavior  resulting  from  uncoordinated 
individual  actions  was  derived.   The  basic  resource  and  economic  theo- 
ries were  then  synthesized  into  a  bioeconomic  theory  cf  an  exploited 
fishery  and  the  on-vessel  entry  and  fish  landings  charges  needed  to 
manage  the  fishery  in  an  efficient  m^anner  were  specified  as  theoretical 
aggregates. 

An  abstract  model  of  the  Gulf  shrimp  industrj'  V7as  constructed  based 
on  the  developed  theory.   The  industry  model  took  the  form  of  three 
sub-models,  one  each  for  the  basic  resource,  harvesting,  and  demand 
sectors.   The  interface  between  the  basic  resource  and  harvesting  sector 
models  was  composed  of  the  availability  of  shrimp  by  size  and  area  and 
the  amount  of  effort  applied  by  the  shrimp  fleet  to  capturing  the  basic 
resource.   The  interface  between  the  harvesting  and  demand  sector  models 
encompassed  the  catch  produced  by  the  fleet  and  the  ex-vessel  price  paid 
for  this  catch  by  the  demand  sector.   The  model  provided  policy  vari- 
ables in  the  age  (size)  at  which  shrimp  first  become  subject  to  capture, 
the  barriers  to  vessel  entry  into  the  fleet  as  expressed  in  annual 


Xll 


license  fees,  and  per  pound  taxes  ciiarged  the  fleet  members  on  the 
shrimp  landed  as  expressed  in  reduced  ex-vessel  prices. 

The  first  objective  was  satisfied  and  the  abstract  model  trans- 
formed into  ^n  cinpirir.al  model  by  drawing,  en  published  research  results 
as  well  as  estimating  model  parameters  from  primary  secondary'  data. 
The  empirical  model  of  the  Gulf  shrimp  industry  was  developed  as  a 
simulation  model  and  a  computer  program  was  developed  to  generate  model 
behavior  over  time.   Information  generated  by  the  simulation  model  on 
selected  indicators  of  industry  performance  was  used  to  satisfy  the 
second  objective  by  establishing  tentative  conclusions,  subject  to  the 
limitations  of  the  model,  as  to  the  relative  effectiveness  of  the  poli- 
cies considered  in  attaining  alternative  objectives. 


xiii 


CHAPTER  I 


INTRODUCTION 


niere  are  both  academic  and  practical  reasons  for  this  particiilar 
studj'.   Tlic  shrimp  resource  is  an  open  access  resource.   E>;cc'pL  for 
situations  attributable  to  territorial  waters,  the  shrimp  resource  is 
open  to  exploitation  by  anyone  possessing  the  physical  capabllit}/  to 
exploit  it.   The  problems  involved  in  creating  instjtutions  for  effec- 
tive public  or  private  ownership  of  open  access  resources  and  in 
determining  the  relative  efficiency  of  exploitation  of  the  resource 
under  various  institutional  forms  are  particularly  intriguing  from  the 
academic  point  of  view. 

These  problems  are  not  without  practical  importance.   For  example, 
the  annual  value  of  the  Gulf  shrimp  resource  at  point  of  first  sale  has 
been  in  the  neighborhood  of  $100  millioii  in  recent  years.   A  priori 
theoretical  reasoning  suggests  that  all  the  return  attributable  to  the 
shrimp  resource  as  a  productive  input  will  be  dissipated  so  long  as  it 
retains  an  open  access  status.   Thus,  a  problem  of  immediate  practical 
importance  is  to  determine  the  extent  of  the  potential  return  available 
from  the  resource  and  the  relative  efficiency  of  different  institutional 
schemes  in  capturing  this  return. 

The  objectives  of  this  study  are  to: 

1.  Determine  the  responses  of  individual  fishing  firms  in  the 
Gulf  of  Mexico  shrimp  industry  and  the  resultant  aggregate 
effect  for  the  industry  to  changes  in: 

1 


2 

a.  The  shrimp  population  In   the  Gulf  of  Mer.ico; 

b.  Technologic;il  coijditlcias  of  harvesting  and  processing;  and 

c.  Demand  condiiions. 

2.   Determine  whether  alternative  management  strategies  exist  whicli 
will  improve  industry  efficiency  in  a  social  sense,  reducing 
overinvestment  and/or  the  extent  of  non-optimal  huirbandry  prac- 
tices that  occur  as  a  result  of  the  free  use  of  an  open  access 
resource. 
The  plan  of  attack  for  fulfilling  the  above  objectives  Is  briefly 
as  follows.   Chapter  II  presents  some  theoretical  considerations  with 
respect  to  open  access  resources,  especially  fishery  resources.   (The 
term  "fishery  resources,"  as  used  here,  includes  the  crustaceans.) 
These  considerations  involve  economic,  as  well  as  biological,  theories 
of  the  fishery  resources.   Chapter  III  presents  a  description  and 
abstract  model  of  the  Gulf  shrimp  resource  involving  both  economic  and 
biological  considerations — thus,  it  is  a  bioeconomic  m.odel.   Chapter  IV 
discusses  the  methodology  used  and  data  limitations.   Chapter  V  contains 
the  results  of  the  application  of  the  model  to  the  available  data, 
simulated  results  from  operating  the  system  under  alternative  management 
strategies,  and  a  discussion  of  policy  implications.   Chapter  VI,  the 
concluding  chapter,  is  devoted  to  a  review  of  the  study  and  a  critical 
evaluation  of  the  analysis  with  suggestions  for  improvement  and  further 
research. 


CHAPTER  II 


BIOECONOMIC  THEORY 


A  fishery  is  a  prime  example  of  a  system  involving  man  as  an  ecc- 
nomically  viable  predator  on  a  natural  population.   To  adequately 
describe  such  a  system,  biological  theory  describing  the  behavior  of 
the  natural  population  must  be  meshed  with  economic  theory  describing 
the  behavior  of  man  as  the  predator.   The  result  of  this  synthesis  may 
best  be  called  "biocconomic  theory."  The  biological  stock  enters  into 
the  economic  model  as  an  input.   Consequently,  when  dealing  with  bioeco- 
nomic  theory,  biological  theory  is  appropriately  treated  first.   After 
a  discussion  of  fishery  population  theory,  the  economic  theory  of 
exploitation  of  open  access  resources  is  presented.   The  chapter  con- 
cludes with  a  combination  of  the  two  theories  into  a  bioeconomic  theory 
of  a  fishery. 

Fish  Population  Theory 

This  section  draws  heavily  on  som.e  recent  work  in  fish  population 
analysis  by  J.  A.  Gulland  [20],  although  generalized  functional  forms 
are  used  in  place  of  Gulland 's  specific  functional  notation. 

Considering  a  closed  stock  subject  to  exploitation,  the  factors 
(rates)  determining  changes  in  the  stock  over  time  are  [see  also  20, 
p.  3]: 

1.   Recruitment  or  the  rate  at  which  young  fish  reach  a  size  and/or 
age  at  which  they  are  considered  to  become  part  of  the  stock 

3 


subject  to  exploitation;  e.g.,  larv:'!  shrimp  and  pelagic 
flounder  are  not  considered  ))art  of  the  conmercially  exploited 
stocks  of  shrimp  and  flounder.   If  tliere  is  no  clear-cut 
natural  recruitment  size,  then  the  recruitment  size  may  be 
arbitrarily  set. 

2.  Growth  of  individuals  or  the  time  rate  of  gain  in  length  and/or 
weight  or  some  other  measure  of  growth. 

3.  Deaths  due  to  fishing  or  the  catch  rate;  these  V7ill  be  roughly 
correlated  with  landings  and  will  be  ascertained  by  "fishing 
effort"  which  is  determined  outside  the  biological  frame^TOrk 
of  the  fishery. 

4.  Deaths  due  to  other  causes  or  the  natural  mortality  rate. 
Figure  2.1,  corresponding  roughly  to  Gulland's  Figure  1.1  [20, 

p.  A],  depicts  the  behavior  over  time  of  the  length,  weight,  and  number 

of  individuals  in  a  particular  year-class  (the  progeny  of  the  stock  in 

a  given  year)  and  the  behavior  over  time  of  the  total  weight  of  the 

year-class. 

The  ordinate  of  Figure  2.1  is  assumed  to  be  arranged  in  units 

appropriate  to  the  particular  curve  of  interest.   The  abscissa  measures 

time.   The  reproductive  process  is  assumed  to  be  essentially  complete 

at  t  ;  t   is  the  time  at  which  the  individuals  are  recruited  to  the 
o   r 

stock  while  t   is  the  point  in  time  at  which  they  become  subject  to 
mortality  from  fishing.   Beyond  t  ,  the  solid  portion  of  the  line  repre- 
senting number  of  individuals  is  drawn  under  the  assumption  of  zero 
fishing  mortality,  while  the  dashed  portion  represents  numbers  of  indi- 
viduals when  the  year-class  is  subjected  to  some  constant  level  of 
fishing  mortality. 


VJeight , 
Length, 
or  Number 


W  maxiraum 

or 
L  maximum 


1 

^^  individual  length 

individual  veit^ht 


f;otal  vcight  of 
year-class 


number  of  individuals 


-Bl 


Time 


Figure  2.1.   Curves  Describing  the  Population  Dynamics  of  a 
Single  Year-Class  Within  a  Fishery 


6 

The  total  weight  curve  is  calculated  under  the  assumption  of  an 
uncxploited  stock.   The  total  weight  of  t.ie  year-class  in  the  absence 
of  fishing  is  assumed  to  increase,  at  first  at  an  increasing  rate  until 
time  t  ,  and  thcr  at  a  decreasing  rate  until  some  maximum  weight  is 
reached  at  time  t  •   Then  total  weight  declines,  more  and  more  rapidly 
at  first  but  eventually  at  an  algebraically  increasing  rate,  until  the 
year-class  is  eliminated  from  the  stock.   Individual  fish  are  assumed 
to  grow  in  length  throughout  their  lives  at  a  decreasing  rate.   Indi- 
vidual fish  gain  in  weight  throughout  their  lives  at  an  increasing  rate 
during  the  first  part  and  at  a  decreasing  rate  during  the  latter  part 
of  their  lives.   The  number  of  individuals  in  a  year-class  decreases 
over  time,  slowly  approaching  and  finally  reaching  zero,  implying  that 
the  natural  mortality  rate  is  positive  and  decreases  over  time;  i.e., 
the  rate  of  survival  is  negative  but  increasing  algebraically  at  any 
point  in  time.   The  individual  weight  and  number  factors  combine  to 
produce  the  aggregate  weight  behavior  described  above. 

The  recruitment  and  fishing  mortality  factors  do  not  lend  them- 
selves to  straightf on^/ard  description  so  vjell  as  the  otlier  factors.   If 
the  population  has  a  well-defined  and  short  spavrning  season  and  homoge- 
neous development  of  young  so  that  all  members  of  each  year-class  are 
essentially  the  same  size,  then  the  recruitment  function  will  take  the 
form  of  a  series  of  points,  zero  at  all  times  other  than  the  instant  of 
time  in  which  year-classes  enter  the  exploitable  stock,  at  which  time 
the  function  takes  on  the  value  of  the  size  of  the  year-class  in  ques- 
tion.  However,  if,  as  is  more  likely,  the  spawning  period  occupies  a 
more  or  less  significant  portion  of  the  year  and  subsequent  development 
is  not  homogeneous,  then  recruitment  will  not  occur  at  an  instant  of 
time.   Rather,  it  will  be  spread  over  an  interval  of  time  during  which 


7 

the  proportion  of  the  year-class  being  recruited  into  the  stocV  increases 
at  first  at  an  increasing  and  later  at  a  decreasing  rate.   Given  that 
the  juveniles  are  in  the  sairie  area  as  is  the  exploited  stock,  the  time 
pattern  of  recruitment  is  of  interest  wi*"h  respect  to  determining  opti- 
mal time  patterns  of  fishing  and  gear  selectivities.   An  alternative 
situation  is  one  in  vhich  juveniles  are  segregated  from  the  exploited 
stock  by  location  and  recruitment  occurs  by  migration.   In  this  situa- 
tion, the  proportions  of  the  year-class  of  different  length  (size)  being 
recruited  are  of  interest.   Until  a  mean  recruitment  length  is  reached, 
the  proportion  of  the  year-class  entering  the  exploited  stock  increases 
at  an  increasing  rate  while  it  increases  at  a  decreasing  rate  beyond 
this  mean  length.   To  place  the  appropriate  emphasis  on  the  recruitment 
rate  and  to  relate  it  to  an  aspect  of  fishing  effort — gear  selection — 
the  following  quote  from  Gulland  is  helpful: 

Recruitment  is,  by  its  nature,  much  less  easy  to  express 
in  quantitative  terms  than  mesh  selection.   As  the  main 
interest  is  in  the  combined  effect  of  recruitment  and 
selection — i.e.,  the  pattern  of  entry  into  the  catch — the 
recruitment  pattern  is  very  important  when  it  is  above, 
or  overlaps,  the  range  of  gear  selection,  but  not  when  it 
is  complete  before  gear  selection  starts.   If,  therefore, 
all  fish  have  been  recruited  at  a  size  below  the  selection 
range  of  any  likely  mesh  size,  then  the  precise  pattern  of 
recruitment  may  be  ignored,  and  it  can  be  taken  arbitrar- 
ily as  occurring  at  some  convenient  length  or  age  below 
the  selection  range  ...  [20,  p.  86]. 

The  importance  of  the  recruitment  rate  seems  to  lie  in  its  relationship 
to  gear  selectivity.   The  interaction  of  these  two  factors  produce  the 
commercially  important  result:   the  rate  of  entry  of  juveniles  into  the 
catch. 

Gear  appears  to  fall  into  three  general  groups:   completely  non- 
selective gear;  e.g.,  a  fine-mesh  purse  seine;  gear  that  is  non-selective 
above  some  size  of  fish;  e.g.,  certain  trawls;  and  gear  that  is  selective 


8 
over  a  certain  range  of  fish  sii,e,  allov;ing  those  smaller  and  larger  to 
escape;  e.g.,  gill-nets.   There  is  little  to  say  about  the  completely 
non-selective  gear  except  to  point  out  that  if  legal  size  restrictions 
on  landings  are  placed  on  a  fishery  (thus  arbitrarily  defining  the  size 
at  which  juveniles  are  recruited  into  the  exploited  stock)  and  juveniles 
are  subjected  to  the  non-selective  gear,  then  a  certain  portion  of  the 
catch  will  be  discarded  at  sea.   If  part  or  all  of  this  discarded  catch 
dies,  the  various  year-classes  will  be  reduced  by  the  extra  mortality 
not  reflected  in  landings.   Thus,  the  stock  will  be  reduced  beyond  what 
would  be  expected  from  measured  fishing  mortality  (landings).   The 
implication  is  that  in  order  to  properly  assess  the  population,  measured 
fishing  mortality  (landings)  must  be  adjusted  to  allow  for  the  mortality 
experienced  by  the  juveniles. 

Gear  that  is  selective  to  the  extent  that  escapement  of  individuals 
below  some  size  is  allox'/ed  is  of  particular  interest  in  this  study. 
Shrimp  trawls  allow  small  individuals  to  pass  through  the  netting  while 
larger  individuals  are  retained.   The  selectivity  is  not  perfect, 
however,  and  over  some  size  range,  the  proportion  of  individuals  retained 
increases  with  size  and  varies  from  zero  to  one.   It  seems  reasonable 
to  assume  that  the  proportion  of  individuals  retained  (recruited  into 
the  catch)  increases  at  first  at  an  increasing  and  then  at  a  decreasing 
rate  over  the  relevant  size  range,  producing  a  sigmoid  curve  in  a  plot 
of  fraction  retained  against  size.   If  a  size  limitation  is  placed  on 
landings  at  a  size  falling  within  this  selection  range  and  if  all  or 
part  of  the  resultant  discarded  catch  dies,  the  yield  curves  estimated 
from  recorded  landings  data  will  underestimate  the  potential  yield  by 
not  taking  into  account  the  fishing  mortality  experienced  by  the 
juveniles.   In  this  situation  restrictions  on  gear  selectivity,  if 


9 

feasible,  restrictions  on  time  of  fishing,  if  the  recruitment  pattern 
is  time-oriented,  and/or  restrictions  on  location  of  fishing,  if 
recruitment  is  by  migration,  may  present  superior  alternatives  from  the 
standpoint  of  maximizing  yield  for  a  given  amornt  of  effort  Jn  that 
simultaneously  the  year-classes  being  recruited  are  strengthened  and  a 
larger  proportion  of  the  catch  handled  is  actually  landed. 

Gear  that  is  selective  over  a  certain  si?.e  range  is  probably  t)ie 
most  effective  as  far  as  selection  is  concerned.   Gill-net  selectivity 
typifies  this  type  of  gear,  having  a  selectivity  curve  (plot  of  propor- 
tion retained  on  size)  that  is  normal  in  shape.   Size  limitations  are, 
apparently,  seldom  used  in  conjunction  with  restrictions  on  mesh  size 
as  gill-net  selectivity  curves  appear  to  be  sufficiently  sharp  so  as 
to  cause  size  of  fish  retained  and  mesh  size  to  be  closely  related.   It 
is  apparently  easier  to  regulate  mesh  size  than  to  enforce  minim.um  size 
limits  on  fish  in  the  catch,  thus  the  former  course  of  action  is  taken. 
This  action  usually  serves  to  eliminate  the  problems  involved  in 
estimating  "true"  selectivity  or  yield  curves  when  legally  defined 
recruitment  sizes  and  gear  selectivity  ranges  overlap.   Gear  that  is 
selective  only  below  some  certain  size  (so  that  proportion  of  fish 
retained  varies  from  zero  to  one  over  the  selection  range)  is  the  gear 
considered  below. 

Deaths  due  to  fishing  are  determined  in  large  part  by  the  amount 
of  fishing  effort  expended  and  are  thus  determined  by  forces  exogenous 
to  the  biological  system.   However,  a  constant  level  of  fishing  effort 
per  unit  area  and  per  unit  time  produces  mortality  behavior  similar  to 
natural  mortality.   A  constant  fishing  mortality  coefficient  (defined 
as  an  increasing  linear  function  of  a  measure  of  fishing  effort  such  as 


10 

number  o£  trav;l  tov/s  per  unit  area  per  unit  tiii.u)  implies  that  tlie 
number  of  fish  surviving  over  time  from  a  given  recruited  year-class 
decreases  but  3t  an  algebraically  increasing  rate. 

The  above  discussion  of  factors  affecting  a  particular  year-class 
of  a  fisli  stock,  and  the  stock  itself  by  extension  to  all  year-classes 
making  up  the  stock,  is  conveniently  summarized  by  presenting  the  theory 
in  generalized  notational  form.  The  expressions  that  follow  represent 
a  modification  and  extension  of  CuJ.land's  derivation  of  a  simple  yield 
curve  for  a  single  year-class  [2.0,  section  9].  The  variables  of 
interest  are: 

N  =  number  of  fish  surviving  at  age  (t  -  t  )  during  a  unit  time 

interval  t. 
N  =  number  of  fish  considered  to  be  recruited  during  t,  either  by 
migrating  to  a  different  area  or  by  reaching  a  particular 
size. 
N  =  number  of  fish  retained  by  gear  during  t. 

C  =  number  of  fish  caught  during  t.  

Y  =  the  weight  of  the  catch,  C  ,  during  t. 
L  =  average  length  at  age  (t  -  t  ) . 
W  =  average  v/eight  at  age  (t  -  t  )  . 

B  =  biomass  (total  weight  of  year-class)  at  age  (t  -  t^) . 
M  =  instantaneous  natural  mortality  coefficient. 
F  =  instantaneous  fishing  mortality  coefficient  defined  to  be  a 

linear  function  of  fishing  effort  per  unit  area  per  unit  time. 
The  time  index,  t,  ranges  from  time  of  completion  of  reproductive 
process,  t  ,  to  infinite  time,  t^  and  thus,  (t  -  t^)  is  the  age  of  an 
average  member  of  the  year-class.   Two  ages  of  interest  are  (t^  -  t^) , 


11 

the  mean  recruitment  age  of  the  year-clasR  at  vjhlch  all  individuals  may 
be  assumed  recruited,  and  (t   -•  t  ),  tlie  mean  age  at  which  the  year- 
class  becomes  subject  to  fishing  mortality.   These  ages  may  be  the  same 
in  time-varying  recruitment  or,  especially  in  location- varying  recruit- 
ment, they  may  be  different.   In  any  event,  they  are  defined  to  represent 
the  ages  in  the  interva.ls  during  which  recruitment  and  selectivity  occur 
at  which  one  half  of  the  year-class  is  considered  recruited  and/or  is 
retained  by  gear  when  contacted.   It  is  oftentimes  convenient  to  assume 
that  the  full  year-class  is  recruited  or  becomes  subject  to  fishing 
mortality  at  the  relevant  mean  age. 

The  theoretical  relationships  with  directions  of  change  are: 

1.  Number  of  fish  and  total  mortality  rate  v^7ith  direction  of 
change: 

(2.1)  N  =  N(M,  F,  t  -  t  ) 

t 

(2.2)  dN  /dt  =  N  (N^)  <  0 

(2.3)  d^Nj./dt^  =  N  (Nj.)  >  0 

(2.2)  and  (2.3)  also  hold  when  F  =  0  or  M  =  0. 

2.  Length 


(2.4) 

L^  =  L(t) 

(2.5) 

dL^/dt  >  0 

(2.6) 

d^Lj./dt^  <  0 

3. 

Weight 

(2.7) 

W^  =  W(t) 

(2.8) 

dW^/dt  >  0 

(2.9) 

d\^/dt^  >  0 

12 
(2.9a)   d^v/j./dr.^  <  0   ,    '  ^  ^r 

where  t   is  such  that  d  W  /dt      .   =0. 
w  t.     t  -  t^ 

4.   Bioraass 

(2.10)  B^  =  N^W^ 

(2.11)  dB^/dt  =  W^   dN^/dt  +  N^   dW^/dt 
(2.11a)  dB^/dt  >   0        ,        t   <    tg 
(2.11b)  dB^/dt  <   0        ,        t  >    tg 
(2.11c)  dB^/dL  =0        ,        t  =   tg 

dW     dN  2  2 

(2.12)  d^B^/dt^  =  W^   d\^^/dt^  +   2  J~  dT"  "^  ^\  "^   "t'''^^ 

(2.12a)      d^B^^/dt^  >   0        ,        t  <    tj^^        ,        t   >    t^2 

(2.12b)      d^B^/dt^  <   0        ,        tg^  <   t  <   tg^ 

(2.12c)      d^B^/dt^  =   0        ,        t  =   tg^        ,        ^^  =   '^B2 

Conditions  (2.11a),  (2.11b),  and  (2.11c)  describe  the  relative  offsetting 
effects  of  decreases  in  biomass  due  to  reduction  in  numbers  of  indivi- 
duals versus  increases  in  biomass  due  to  increase  in  individual  weight. 
Equation  (2.12)  expresses  the  variation  in  rate  of  change  in  biomass  in 
terms  of  rates  of  change  and  direction  of  rates  of  change  of  numbers  of 
individuals  and  individual  weight.   Conditions  (2.12a),  (2.12b),  and 
(2.12c)  state  the  direction  of  rate  of  change  over  different  periods  of 

time  and  are  consistent  with  (2.2),  (2.3),  (2.8),  (2.9),  and  (2.9a). 

* 
5.   Recruitment  with  proportion  of  year-class  recruited  (R^  =  Nj./N^) 

expressed  as  a  function  of  age,  (2.13),  and  length,  (2.16). 


13 
(2.13)    R^  =  n'  (M,  F,  t.  -  l:^)/N(K,  F,  t  -  t^^ 

*        * 

t^  <  t  <  t^ 

(2.13a)   R,^  =  0    ,    t  5  tj^ 

(2.13b)   P^  ^  -^    '    ^  -  *^3 

(2.1A)    dR  /dt  >  0    ,    t  <  t  <  t 

(2.15)  d^R  /dt^  >  0    ,    t^  <  t  <  t2 
(2.15a)   d^R^/dt^  <  0    ,    t^  <  t  <  t^ 

(2.15b)   d^R  /dt^  =0    ,    '^  "  ^2 

In  equations  (2.16)  -  (2.18),  L  must  bs  considered  a  length  measure, 
not  an  average,  and  N  (L  )  is  the  number  of  fish  of  length  less  than  L 
that  are  considered  to  be  recruited. 

(2.16)  R^  =  N*(L^)/N(M,  F,  t  -  t^)    ,    L^.^  <  ^^  <  Lp^ 

(2.16a)  Rj.  =  0    ,   L^  <  L^^ 

(2.16b)  R^  =  1    ,   L^  >  Lj,3 

(2.17)  dR^/dL^  >  0    ,    L^i  <  L^  <  L^3 

(2.18)  d^R^/dL^^  ^  Q    ^    ^^^^  ^  ^^  ^  ^^^^ 

(2.18a)   d^R^/dL^^  <  0    ,   ^^2  '^  ^t  ^  ^R3 
(2.18b)   d^R^/dLj_^  =  0    ,    L^  =  Lr2 

6.   Selectivity  (travel-type)  with  proportion  of  fish  retained  by 

+ 
gear  (S  =  N  /N  )  expressed  as  a  function  of  length  (a  measure 

of  size  proportional  to  the  positive  square  root  of  surface 

area  and  to  the  cube  root  of  volume  or  weight).   In  equations 


14 
(2.19)  -  (2.21),  as  in  (2.16)  -  (2.18),  L^  liUould  be  inter- 
preted as  a  measure  of  length,  not  an  average  related  to  the 
population. 


(2.19)  S^.  --   4(L^)/N(M,  F,  t  -  t^)    ,    Lg^  <  L^ 
(2.19a)  Sj.  -  0    ,   L^  <  Lg^ 

(2.19b)  S^  =  1    ,   Lj.  >  Lg3 

(2.20)  dS^/dLj.  >  0    ,   I^si  '^  -^t  ^  ■^SS 

(2.21)  d2Sj./dL^^  >  0    ,   Lgi  <  Lt  '^  ^S2 
(2.21a)  d^S^/dL^_^  <  0    ,   Lg2  <  L^  ^  -"^SS 

(2.21b)  d^S^/dLj.^  =  0    ,   L^  =  Lg2 

7.  Catch  in  numbers  of  fish 

(2.22)  C^  =  C(F,  N^) 

(2.23)  9C^/8F  >  0 

(2.24)  8^Cj./3F^  >  0   ,   0  <  F  <  F^ 

(2.24a)  a^C^/3F^  <  0    ,   F^  <  F  <  ~ 

(2.25)  9C^/3N^  >  0 

(2.26)  3^C^./3N^^  >  0   ,   0  <  N^  <  N^ 
(2.26a)  3^C^/3N^^  <  0   ,   N^  <  N^  <  «> 

(2.27)  3^C^/3F3Nj.  >  0 

(2.28)  dC  =  ^  dF  +  ^  dN 

^        3F       SN^ 


<  Lr,^ 


s:j 


15 

')  2 

(2.29)  d  C  -   ^t  dF  +  2  _  t_  d.-^dN  +  D^_C_  dN  " 

t 
Conditions  (2.23),  (2. 24).  and  (2.24a)  state  that  the  Earginal  return 
to  effort,  assuiiiing  numbers  of  fish  constant,  is  everywhere  positive 
but  declines  after  some  level  of  effort  is  reached.   Conditions  (2.25), 
(2.26),  and  (2.26a)  describe  a  different  type  of  marginal  behavior, 
namely  that  as  numbers  increase,  assuming  effort  constant,  catch 
increases  but  at  a  decreasing  rate  beyond  some  population  level. 
Condition  (2.27)  states  that  as  numbers  increase,  the  return  to  marginal 
units  of  effort  increases  or,  conversely,  as  effort  increases,  the 
marginal  increment  due  to  increasing  numbers  increases.   Equation  (2.28), 
expressing  the  total  change  in  catch  for  changes  in  effort  and  numbers, 
is  especially  interesting  when  divided  through  by  the  incremental  change 
in  fishing  mortality,  dF,  a  proxy  for  effort.   Recalling  that  number  of 
fish  is  a  declining  function  of  fishing  mortality,  it  becomes  apparent 
that  the  change  in  catch  due  to  a  change  in  effort  is  not  readily  pre- 
dictable as  to  sign  or  direction  of  change — given  by  equation  (2.2y) — 
when  allowance  is  made  for  the  negative  effect  of  increasing  effort  on 
fish  numbers. 

8.   Weight  of  catch 

(2.30)  Y^  =  Y(F,  N^,  W^) 

or 
(2.30a)   Y^  =  Y(F,  B^) 

(2.31)  8Y^/3F  >  0 

(2.32)  3^Y  /3F^  >  0    ,    0  <  F  <  F^ 


(2.32a)   3^Y^/3F^  <  0    ,    F^  <  F  < 


CO 


(2.33)   ?A'^/9Nj.  >  0 


(2.3M    9^Y^/3N^^  >  0    ,    0  <  N^  <  N^ 

(2.34a)   9^Y  /3N  ^  <  C    ,    N^  <  N^  <  «> 

(2.35)  8Y  /3w  >  0 

(2.36)  3^Y^/3W^^  >  0   ,   0  <  W^  <  VJ^ 
(2.36a)  3^Y  /3VJ  "*'  <  0    ,   W^  <  W^  <  ^ 

(2.37)  3^Y  /3F3N  >  0 

(2.38)  d^'-Y   /3F3W  >  0 

(2.39)  3^Y  /3N  3W  >  0 

3Y       3Y        3Y 

(2.40)  dY^  =  -3^  dF  +  3^  dN^  +  3^  dW^ 

2     ^'^    2   ^^\  2   ^\    2     ^^\ 

dF         oN  oW  t 

3^Y  3^Y 

+  2  ^^^f,  dFdW^  +  2  ^-.  ^f.  dN^  dW^ 
3F3W      t     3N  3W    t   t 

Equations  and  conditions  (2.30)  -  (2.39)  describe  the  weight  of  the 
catch  and  the  partial  effects  of  changes  in  effort,  numbers  of  fish, 
and  average  weight  of  fish.   Equations  (2.40)  and  (2.41)  describe  the 
total  effect  on  weight  of  catch  of  simultaneous  changes  in  effort, 
numbers,  and  individual  weight  and  are  most  interesting  when  divided 
through  by  the  incremental  change  in  effort.   As  is  the  case  in  (2.28), 
the  change  in  weight  of  catch  due  to  a  change  in  effort  is  not  predict- 
able a  priori  when  the  decreasing  effect  on  numbers  of  increases  in 


17 
eitort;  is  taken  into  account,   A  consideration  of  (2.41)  indicates  that 
the  direction  of  rate  of  change  in  v/eight  of  catch  due  to  changes  in 
fishing  mortality  is  as  unpredictable  as  the  rate  of  change  itself. 

Equations  and  conditions  (2.22)  -  (2.41),  especially  those  dealing 
v;ith  changes  in  fishing  mortality,  represent  that  part  of  fish  popula- 
tion theory  that  may  provide  a  liiik  witli  an  econouiic  theory  of  coiiimoa 
property  resource  exploitation. 


A  Theory  of  Open  Access  and  Common 
Property  Resource  Exploitation 


In  the  opening  chapter,  a  distinction  between  open  access  resources 
and  common  property  was  implied.   Before  erecting  a  theory  of  exploita- 
tion, more  explicit  definitions  of  the  resources  are  needed.   Open 
access  resources  are  those  that  arc  open  to  exploitation  by  any  who 
possess,  or  may  ever  possess,  the  physical  ability  to  exploit  the 
resource.   In  terras  of  ownership,  the  resource  is  not  owned  by  djiy 
group  comprising  fewer  people  than  the  world  population.   The  effec- 
tiveness of  world  ownership  as  an  institution  to  implement  management 
goals  is  sufficiently  limited  to  permit  acceptance  of  "open  access"  as 
synonjTuous  with  "no  ownership"  when  applied  to  resources. 

The  terra  "cormion  property,"  when  applied  to  resources,  implies  that 
ovsmership  exists  by  use  of  the  word  "property"  but  that  ownership  is 
exercised  by  a  group  of  people  in  "common,"  for  example,  the  citizens 
of  a  state  or  country.   Institutions  for  attaining  optimal  exploitation 
rates  may  or  may  not  exist  but  the  implication  is  that  the  "common" 
group  is  not  so  large  as  to  make  their  creation  impossible.   The  key 
difference  between  "common"  and  "private"  property  resources  lies  in 
the  behavior  of  the  individual  exploiter.   In  the  common  property 
situation,  each  individual,  playing  an  unrestrained  profit-seeking  role. 


18 
will  follow  a  course  of  action  that  is  inconsistent  vzilh  an  optimal  use 
rate  for  tlie  resource  as  a  v;hole  anrl  that  does  not  maximize  profit  for 
the  group  exercising  the  common  property  rights.   In  the  cnse  of  private 
property,  the  expectation  is  that  the  individual,  in  pursuing  a  profit 
maximizing  course,  will  act  in  a  manner  consistent  V7ith  optimal  use  of 
the  resource  as  a  whole  assuming  no  technical  externalities.   Examples 
illustrating  these  essential  differences  exist  in  the  form  of  land  and 
oil  pools  in  common  and  private  property  situations  and  fish  in  open 
access  (high  seas)  and  regulated  common  property  (territorial  waters) 
situations.   Wlien  arraying  resources  on  a  scale  denoting  then  to  be 
open  access,  common  property,  or  private  property,  a  continuum  forms 
with  no  sharp  demarcation  between  the  various  classes.   A  different  and 
helpful  classification  of  resources  by  their  reaction  to  time-varying 
use  rates  is  presented  by  S.  V.  Ciriacy-Wantrup  [12,  pp.  42,  43]. 

Some  relevant  literature  on  fisheries  economics  j.ncludes  the  seminal 
articles  by  H.  Scott  Gordon  [19]  and  Anthony  Scott  [28],  as  well  as  the 
work  of  Christy  and  Scott  [11],  Crutchfield  and  Pontecorvo  [14], 
Crutchfield  and  Zellner  [15],  and  Daniel  Bromley  [9].   The  paper  by 
Bromley  presents  a  provocative  literature  review.   A  comprehensive 
review  of  the  work  just  cited  would  be  redundant  in  view  of  Bromley's 
[9]  work.   However,  acknowledgment  must  be  made  of  the  significant 
contributions  to  fishery  theory  of  these  authors.   The  theory  developed 
here  undoubtedly  owes  much  to  these  authors  but  the  debt  is  in  the  form 
of  general  knowledge  rather  than  specific  contributions. 

The  resource  to  be  exploited  is  assumed  to  be  a  flow  resource  in 
that  it  provides  an  exploitable  flow  of  goods  or  services — fish,  wild- 
life, scenic  beauty,  water,  or  capacity  to  absorb  man-made  effluent — 
from  a  given  area  over  time.   The  resource  may  or  may  not  be  affected 


.19 
by  exploitation  rates,  but  aome  exploitation  I'ate  must,  at  sorae  time, 
be  positive  in  order  for  the  resource  to  be  of  interest  and  maintain 
its  resource  character.   In  addition,  the  marginal  utility  derived  from 
exploiting  the  resource  must  be  positive  in  the  absence  of  externalities. 
That  is,  the  resource  must  not  be  a  "free  good."  This  qualification 
leaves  the  definition  broader  than  may  be  inmiediately  apparent.   For 
example,  stars  of  the  seventh  order  of  magnitude  provide  a  flow  of  star- 
shine  that  is  exploited  at  a  positive  rate  by  astronomers  who  delight  in 
viewing  seventh  order  stars.   The  qualification  does  state  that  for 
something  to  attain  resource  character,  it  must  somehow  affect  humans. 
In  this  sense,  orbital  bodies  under  the  direct  gravitational  influence 
of  seventh  order  stars  do  not  qualify  as  resources  at  the  present  tim^e. 

The  resources  of  interest  are  those  that  require  human  effort  to 
maintain  a  positive  exploitation  rate  and  thus  have  positive  costs  asso- 
ciated with  their  exploitation.   The  effort  required  for  positive 
resource  exploitation  will  vary  over  resources  and  is  considered  to  be 
composed  of  inputs  combined  in  constant  proportions  (linear  expansion 
path)  and  treated  as  a  single  input.   Physical  returns  to  effort  are 
assumed  to  increase  but  at  a  decreasing  rate  beyond  some  level  of  input. 
The  condition  of  the  resource,  including  qualitative  factors,  is  assumed 
to  be  expressed  by  a  single  quantity  index  at  any  point  in  time.   This 
assumption  is,  admittedly,  heroic,  but  does  much  to  facilitate  the 
following  exposition  and,  for  a  fishery,  may  not  be  so  unreasonable  as 
it  first  sounds.   Demand  for  the  product  and  factor  supply  curves  are 
assumed  to  be  less  than  perfectly  elastic  to  the  industry  but  perfectly 
elastic  as  viewed  by  the  individual  firm. 

The  variables  involved  in  open  access  or  common  property  resource 
exploitation  are: 


20 

Y.      =   output   of   producer   i   clvriiig   a  unit   interval  ot    tine,    t;    e.g., 

a  week,  moath,  year,  decade,  etc. 

Y  =  total  output  for  the  industry  during  unit  time  interval  t. 

X.   =  input  or  effort  of  producer  i  durincr  t. 
xt 

X  =  total  industry  input  during  t. 

P   =  price  of  the  output  during  t,  arisumed  constant  over  producers. 

P   =  input  price,  identical  foi"  all  producers,  during  t. 

R  =  a  quantity  index  reflecting  the  condition  of  the  resource 

during  t. 

n  =  number  of  producers  involved  in  the  resource  industry  during 

t. 

TR.^  =  total  revenue  for  producer  i  during  t. 
xt 

TR  =  industry  total  revenue  during  t. 

TC .   =  total  cost  to  producer  i  during  unit  time  interval  t  including 
It  ' 

a  "normal"  return  to  "ii:ced"  resources. 

TC  =  industry  total  cost  during  t. 

NR.^  =  TR.   -  TC.^,  net  revenue  of  producer  i  during  t  or  "pure 
xt      It      It'  "         ■ 

profits. " 

NR  =  TR  -  TC  ,  industry  net  revenue  (pure  profits)  during  t. 

In  generalized  functional  notation,  the  relationships  of  interest, 
their  rates  of  change,  and  the  directions  of  rates  of  change  are  as 
follows : 

9.   Individual  output 

(2.42)    Y.^  =  Y.(X.^,  R^) 
It     X   xt'   t 

(2. A3)   9Y^^/3X^^  >  0 

(2.44)   3^Y^j./3X.^^  >  0   ,   X.J.  <  X.^ 


21 
(2. /,4a)      3\j./9\/  <   0        ,        X.^^  >   X.^ 

(2.45)  9Y.^/3R^  >  0 

(2.46)  S'^'Y.    /SR  ^   >   0        ,        R  <   R""^ 
(2.46a)      d^Y.    /[)R   ^   <   0        ,        R  >   R"'" 

(2.47)  8^Y.^/8X.^3r^  >   0 

xt         It       t 

9Y.  SY 

(2.48)  dY.^   =  ^;^  dX.+  -^r^  6R 

it  dX.  It  dR  t 

it  t 

9  9^..  ,  8^Y  9^Y 

(2.49)  d^Y.^   =  ^  dX./  +   2  x^— ^-^  dX.    dR^   +  z-  dR^ 

It        9^_    2        It  9X.^9R^       It      t        3j^  2  t 

it  t 

10.  Individual  effort   and  numbers   of   individual  producers 

(2.50)  X.^  =   X.(NR^^_^)         ,        r  =   1,    ...,   k        ,        0  1  X.  (NR.  ^..„)   <   X.^ 

(2.50a)      X^j.   =   X^^,    X.  (NR.^_^)    >   X^^ 

(2.51)  ^\t^^^\t-T  ^   °        '        "^  "   ^'    •••'   ^        '        °  -h^^\t-r^    ^  \^ 

(2.52)  9^X.^/9NR.^      9NR.^        >0        ,        l<r<s        ,        s=l,    ...,k 
^          '  it  it-r        it-s  '  —       —  ' 

X.(NR.^      )    <  X.-*" 
1       it-r^  1 

(2.53)  n^  =  n(NR^_^)         ,        r  =   l,    ...,k        ,        0  <  n(NRj._^)    <   n"^ 

(2.53a)      n^.   =  n^,   n(NR^_^)    >   n^ 

(2.54)  9nj./9NRj._j.  >   0        ,        r  =   1,    ...,   k 

(2.55)  9^n^/9NR       9NR^        >0        ,        l<r<s        ,        s=l,    ...,k 

t  t-r        t-s  —       — 

11.  Total  effort 

(2.56)  X^   =   Z.    "t  X.^ 

t  1=1        It 


11 


(A  definition) 


(2.57)  8Xj./:)X.^  =  1 

(2.58)  3X^/?n^  ^^  l.^^   X., /n^ 

12.  Resource  condition 

(2.59)  Rj.  =  R(X^) 

(2.60)  dRj./dX^  <  0 

(2.61)  d^R^/dX^^  >  0 

13.  Total  output 

(2.62)  Y^  =  S.^t  Y.^ 

(2.63)  3Yj./8Y^^_  =  1 

(2.64)  8Y^/3n^  ~   S.^^^t  Y.^/n^  +  ^.^t  SY.^/9n^ 

where,  from  (2.49),  (2.66),  and  (2.64), 

8Y.  /5n  =  OY.  /9R JOR  /3X  )(9X  /Sn  )  <  0 

it     t  it     t       t     t       L     L 

9Y  ^  3Y^ 

(2.65)  dY  =9^dn  +i:.^^t3Y-d^'it  .   ._. 

Equation  (2.42)  describes  individual  output  (harvest  in  pounds, 
numbers,  board  feet,  acre  feet,  etc.,  per  time  unit)  as  a  function  of 
individual  effort  expended  and  the  condition  of  the  resource.   Equations 
(2.43),  (2.44),  and  (2.44a)  describe  the  return  to  an  increment  of 
effort,  assuming  resource  condition  constant,  as  increasing  at  first  at 
an  increasing  rate  but  eventually  (beyond  input  level  X^  )  increasing 
at  a  declining  rate.   In  more  technical  economic  terms,  equation  (2.42) 
is  a  production  function  which  exhibits  diminishing  marginal  returns  to 
effort  beyond  input  level  X^^.   Further,  given  constant  input  (effort) 
and  product  prices,  the  profit-maximizing  producer  will  operate  at  or 


23 
beyond  input  level  X.   if  at  all.   Equations  (2.A5),  (2.46),  and  (2.46a) 
indicate  that  increases  in  the  resource  condition  (effort  constant) 
increase  individual  output  along  a  sigmoid  path,  at  an  increasing  rate 
at  first  but  evertually  at  a  decreasing  rate.   Viewed  another  V7ay, 
equations  (2.45)  -  (2.46a)  indicate  that  the  efficiency  of  a  given 
amount  of  effort  increases  as  it  is  applied  to  increasingly  dense 
resource  stocks  but  at  a  decreasing  rate  throughout.   In  fisheries, 
effort  may  be  divided  into  search  time,  actual  harvest  time,  and  on-board 
processing  time.   For  a  given  amount  of  effort,  increases  in  density  of 
fish  will  at  first  add  to  catch  at  an  increasing  rate  as  both  search  time 
and  actual  harvest  time  are  large  in  relation  to  on-board  processing 
time  and  are  decreasing  while  processing  time  increases.   As  processing 
time,  V7hich  is  independent  of  stock  density,  comes  to  dominate  in  the 
total  effort,  increases  in  stock  density  will  increase  catch  at  a 
decreasing  rate.   Equation  (2.47)  says  that  effort  and  resource  condi- 
tion are  complementary  in  their  effect  on  output,  increases  in  resource 
condition  increasing  the  rate  of  increase  in  product  due  to  increases 
in  effort  and  vice  versa. 

Equation  (2.48)  expresses  the  unconstrained  ("total")  change  in 
individual  output  in  tenns  of  partial  rates  of  change  and  unconstrained 
increments  of  effort  and  resource  condition.   The  direction  of  change 
in  output  is  predictable  from  (2.48)  alone  only  when  effort  and  resource 
condition  move  in  the  same  direction  in  which  case  output  will  move  in 
the  same  direction  as  effort  and  resource  condition.   The  direction  of 
change  in  the  rate  at  which  output  is  changing,  as  given  by  (2.49), 
depends  upon  the  relative  directions  of  change  in  effort  and  resource 
conditions  as  well  as  the  level  of  effort  and  resource  conditions.   For 

similar  movements  in  effort  and  resource  condition  below  X.   and  R  , 

1 


24 

output  will  increase  at  an  increasing  rate.   The  direction  of  rate  of 

change  above  iiiput  levels  X."  and  R'  for  movements  of  effort  and  resource 

condition  in  the  same  direction  will  depend  on  the  relative  magnitudes 

of  (2.44n)  and  (2.46a)  versus  (2.47)  and  t)ie  relative  size  of  the  changes 

in  inputs.   Equation  (2.48)  is  particularly  interesting  when  divided 

through  by  the  increment  in  effort,  dX   ,  and  written  as  (2.66)  in  which 

form  it  expresses  the  unconstrained  change  in  output  resulting  from  a 

change  in  effort  (numbers  of  firms  constant). 

3Y.   dR 
(2.66)   dY.  /dX.   =  3Y.  /9X.  +   ^*^   ^ 


it   it     it   it   3r   dX. 

t    xt 

To  the  individual  member  of  an  industry  with  many  producers,  the  term 
dR  /dX   is  zero.   That  is,  he  neglects  changes  in  the  resource  condi- 
tion that  result  from  changes  in  the  effort  he  expends.   This  may  be 
rational  for  the  individual  since  the  cost  of  considering  this  small 
change  in  his  decision  process  probably  outweighs  the  benefits  to  be 
obtained  from  considering  it.   However,  for  the  industry  as  a  whole, 
the  effect  of  changes  in  effort  on  the  resource  condition  is  not  negli- 
gible.  This  discrepancy  leads  to  the  difference  between  the  sum  of 
changes  in  output  expected  by  individuals  from  individual  changes  in 
effort  and  the  change  in  output  for  the  industry  as  a  whole  resulting 
from  the  sum  of  individual  changes  in  effort.   The  sum  of  changes 
expected  by  individuals  is: 

(2.67)  E.  "t  dY.  /dX_  =  I.    "t  dY.^/dX.^ 

1=1    It   it    1=1    it   It 

while  the  actual  change  for  the  industry  is: 

9Y.   dR 

(2.68)  Z.  "t  dY.  /dX.^  =  E.  "t  dY./dX.^   +  Z.  "t   ^^        ^ 

1=1    It   It    1=1    It   It    1=1 


9R^  dX. 
t    it 


25 

Since  dR  /dX.   is  negative  (it  is  the  product  of  (2.60)  and  the  total 

derivative  of  (2.56)  assuming  u      constant  and  dX.  /dX.   =  0  for  i  ^  i) 

t  J  t   It 

the  actual  change  in  total  output  from  an  increase  in  effort  is  smaller 

dY^      dR 
by  the  positive  amount  -Z._  t  ,,"     -jri —  than  is  the  sum  of  changes 

t      XL 

expected  by  individuals.   This  discrepancy,  derived  assuming  the  number 
of  producers  in  the  industry  constant,  is  part  of  the  reason  that  indi- 
vidual producers,  following  profit-maximizing  courses  of  action,  will 
not  behave  in  a  manner  consistent  with  maximizing  industry  profits. 
Equations  (2.50)  and  (2.50a)  describe  the  effort  of  individual 
firms  as  a  function  of  past  net  revenues  up  to  a  ceiling  (X.  )  beyond 
which  individual  firms  find  themselves  incapable  of  increasing  effort. 
Condition  (2.51)  says  that  higher  past  net  revenues  increase  current 
effort,  and  condition  (2.52)  (for  r  =  s)  describes  the  rate  of  increase 
as  constant  or  increasing  for  the  range  over  which  the  function  is 
defined  on  past  net  revenues.   The  sign  of  (2.52)  (for  r  =  s)  is  inter- 
preted to  mean  that,  when  hypothetical  sets  of  past  net  revenues  are 
compared,  the  increment  in  effort  called  forth  by  an  increment  in  net 
revenue  at  a  higher  level  of  net  revenue  is  at  least  as  large  as  the 
increment  of  effort  called  forth  at  lower  levels  of  net  revenue.   Such 
behavior  is  taken  to  be  typical  up  to  the  ceiling  (X.  )  at  which  the 
individual  cannot  effectively  increase  effort.   The  plausibility  of 
(2.52)  (for  r  =  s)  rests  on  the  assumption  that  individuals  are  more 
sensitive  to  changes  in  net  revenue  at  high  levels  of  net  revenue 
(their  adjustments  are  larger)  than  they  are  at  low  levels  of  net 
revenue.   Equation  (2.52)  (for  r  <  s)  states  that  higher  levels  of  net 
revenue  in  a  given  period  reinforce  the  effects  of  net  revenues  from 
subsequent  periods.   Equations  (2.53)  -  (2.55)  describe  numbers  of 


26 
producers  in  any  time  interval  as  a  function,  similar  to  individual 
effort,  of  past  net  revenues  of  the  industry.   That  is,  entrants  are 
seen  to  increase  at  a  constant  or  increasing  rate  as  a  function  of  past 
levels  of  in'.lustry  net  revenue  with  levels  in  previous  periods  having 
a  reinforcing  effect  on  those  in  subsequent  periods. 

Equation  (2.56)  states  that  total  effort  during  any  time  interval 
is  the  sum  of  individual  effort  over  the  number  of  producers  in  the 
Industry  during  that  interval.   Equation  (2.57)  indicates  that  aggregate 
effort  is  measured  in  the  same  units  as  individual  effort.   Equation 
(2.58)  defines  the  effort  level  of  new  entrants  as  being  at  the  average 
for  the  industry.   Were  equations  (2.53)  -  (2.55)  to  be  developed  for 
different  size  classes  of  producers,  then  (2.58)  would  be  modified  to 
reflect  the  effect  of  entry  into  each  size  class.   Definition  (2.58)  is 
a  sort  of  "minimum  knowledge"  relation  and  should  be  replaced  if  more 
information  is  known  about  entrants. 

Equation  (2.59)  describes  the  condition  of  the  resource  as  an 
instantaneously  adjusted  function  of  effort.   Conditions  (2.60)  and 
(2,61)  state  that  the  resource  condition  declines  as  a  function  of 
effort  but  at  an  algebraically  increasing  rate.  While  the  particular 
form  of  (2.59)  will  depend  upon  the  theory  of  the  behavior  of  the 
resource  under  study,  there  are  probably  few  exceptions  to  the  limits 
imposed  by  (2.60)  and  (2.61).   A  resource  may  be  depleted  as  effort 
Increases  but  it  will  be  depleted  less  and  less  efficiently  so  that  very 
large  amounts  of  effort  are  required  to  finally  destroy  the  resource. 
Equation  (2.10)  in  the  section  on  fish  population  theory,  after  modifi- 
cation to  represent  the  biomass  of  all  year-classes  comprising  the  fish 
stock,  may  be  substituted  for  (2.59)  in  a  bioeconomic  model  of  a  fishery. 


27 

Equation  (2.62)  expresses  total  output  as  the  sum  of  individual 
outputs  over  producers  in  the  industry  during  time  interval  t.   Equation 
(2,63)  states  that  individuals  make  contributions  to  total  output  in  the 
same  magnitude  in  which  individual  output  5s  measured.   Definition  (2.64) 
gives  the  change  in  total  output  resulting  from  nev?  entry  (or  exit)  as 
the  sum  of  changes  in  individual  output  due  to  the  additional  depletion 
of  the  resource  by  the  entrant,  plus  the  product  of  the  new  entrant 
which  is  defined  to  be  the  average  product  of  all  producers  in  the 
industry.   Definition  (2.6A)  could  be  improved  by  reflecting  productivity 
of  entrants  by  size  class  or  incorporating  more  complete  information  on 
the  productivity  of  entrants  when  such  inform.ation  is  available. 

Equation  (2.65)  adds  to  the  sum  over  producers  of  the  behavior 
indicated  by  equation  (2.48),  the  change  in  total  output  resulting  from 
a  change  in  the  number  of  producers.   That  is,  (2.65)  takes  into  account 
the  effect  on  total  output  of  changes  in  established  producer  output 
(the  sum  over  producers  of  the  product  of  (2.48)  and  (2.63)  as  well  as 
the  effect  on  total  output  of  new  entrants  (2.64)).   Rewriting  (2.65) 
as  (2.69)  using  the  rules  of  differential  calculus  and  equation  (2.66) 
helps  to  delineate  these  effects  and  to  point  out  the  discrepancy  in 
situations  arising  from  individual  behavior  as  opposed  to  industry- 
oriented  behavior. 
(2.69)   dY^  =  E.^^t  (3Y.j./SR^)(8R^/3X^.)(3x^/9n^)  dn^. 

+  ^i=l^  (^it/\)  '\ 

+  Z.^-t  (9Y^/8Y.^)OY.^/3X.^)  dX.^ 

+  ^1=1^  (3\/3Y.^)(3Y^^/3R^)(dR^/dX.j.)  dX.^ 


23 
The  first  and  fourth  terms  on  the  riglit-hand  side,  of  (2.69)  are  negative 
while  the  second  and  third  terms  are  positive. 

Assume,  for  the  moment,  constant  product  and  input  prices  and  past 
net  revenues  high  enough  to  encourage  increases  in  effort  by  individual 
firms  as  well  as  entry  by  new  firms.  Individual  producers  believe  that 
they  affect  only  the  elements  of  term  three  from  the  right-hand  side  of 

(2.69)  and  will,  individually,  increase  effort  so  long  as  that  direct 
increment  in  value  of  output  is  greater  than  the  increment  in  value  of 
input  required  for  its  production,  halting  further  increases  when  the 
two  are  equal.   The  ex  ante  equilibrium  position  for  all  producers 
together,  when  each  pursues  his  selfish  interests  in  an  unregulated 
manner,  is  given  by: 

(2.70)  P  ^  E   "t  0Y_/3X.  J  dX.^  =  P  ^  Z.  !^t  dX_ 

yt   1=1     It   It    It    xt   1=1    It 

or,  if  l^J^t   dX^j.  =  1 

(2.70a)  ?       I.    '^t    (8Y.  /9X.  J  dX.^  =  P  ^ 
yt  1=1     It   It    It    xt 

or,  if  dX.   =1 
It 

(2.70b)   E.  "t  P  ,(8y.  /3X.J  =  n  P  ^ 
1=1   yt    It    It     t   xt 

or 

(2.70c)  Z..;t  Py,0Y^,/3X,,)/n^  -  P,, 

Equations  (2.70)  -  (2.70c)  state  an  ex  ante  condition  that  individuals 
attempt  to  attain,  namely  to  equate,  on  an  individual  basis,  the  value 
of  the  marginal  product  of  the  input  with  its  price.   This  translates, 
on  an  industry-wide  basis,  to  equating  the  value  of  the  marginal  product 
of  a  one-unit  Increase  in  industry-wide  effort  to  the  price  of  the 
input  (2.70a)  or  to  equating  the  value  of  marginal  product  averaged 
over  members  of  the  industry  to  the  price  of  the  input  (2.70c).   These 


29 
conditions  cannot  obtain  ex  post  and  the  left-hand  side  of  (2.70)  viil 
(assuming  numbers  of  firms  constant)  be  reduced  by  the  product  of  P 
and  the  fourth  teiin  on  the  right-hand  side  of  (2.69)  so  that  the  average 
for  the  industry  of  the  actual  value  of  marginal  product  of  effort  is 
less  than  the  price  of  that  effort  as  indicated  in  (2.71). 

(2- 71)   ^t  h=l'    t^^^it/^^it)  ■'    (9Y,,/9\)(dR^/c^X.^)]  dX.^/n^  <  P^^ 
This  is  not  the  final  situation  for  the  industry  as  a  ichole.   Past  net 
revenues  were  assumed  to  be  high  enough  to  entice  new  entrants.   New 
entrants  have  a  mixed  effect  on  output:   they  tend  to  reduce  it  by 
depleting  the  resource  through  increases  in  effort  (term  one  on  the 
right-hand  side  of  (2.69))  but  they  increase  it  by  the  average  produc- 
tivity for  the  industry  (term  two  of  (2.69)).   Thus,  new  entrants  may 
have  a  positive,  negative,  or  nei\tral  effect  on  total  output.   However, 
new  entrants  will  expect  to  receive  the  average  revenue  for  the  industry 
as  a  whole  and  will  plan  to  enter,  ex  ante,  so  long  as  industry  net 
revenue  (or  average  net  revenue)  is  positive,  stopping  when  average 
industry  revenue  (marginal  revenue  to  entrant)  equals  average  industry 
cost  (marginal  cost  to  entrant).   However,  all  the  entrants  together 
affect  the  resource  by  depleting  it  so  that,  ex  post,  the  increment  to 
industry  revenue  from  entry  will  be  less  than  average  factor  cost  by 
the  value  of  the  marginal  depletion  caused  by  the  new  entrants  (P 
times  term  one  of  (2.69)).   Thus,  the  increment  in  value  of  total  output 
(all  prices  constant)  is  made  up  of  the  increment  due  to  entrants  and 
the  increment  due  to  expansion  of  effort  by  established  members  of  the 
industry.   For  both  increments,  ex  post  value  of  marginal  product  for 
the  industry  is  less  than  cost  of  the  marginal  input  although  individ- 
uals seek  ex  ante  to  equate  apparent  value  of  marginal  product  and  cost 


30 
of  marginal  input.   Sinco  cogIg  must  equal  revenues  ex  2ps_t,  the  nega- 
tive net  marginal  revenues  must  he  home  hy  the  indiviJ.ial  J'inus  in  the 
industry  and  may  be  evident  as  lov;  incomes  or  less  than  "noriiial"  returns. 
Thus,  high  past  net  revenues  lead  to  lov7  net  revenues  In  the  current 
time  period  and  the  unstable  nature  of  the  situation  is  apparent. 

A  stable  situation  may  prevail  only  if  firms  continuously  accept 
less  than  "normal"  returns  or  if  all  firms  in  the  industry  luckilj' 
discover  that  proper  ratio  of  privately  expected  value  of  marginal 
product  to  marginal  factor  cost  that  equates  the  increment  in  value  of 
output  for  the  industry  to  the  increment  in  industry  cost.   A  third 
alternative,  in  which  firms  learn  to  reckon  all  costs  (voluntarily  take 
the  viewpoint  of  the  industry)  seems  unworkable  since  firms  would  not 
be  likely  to  have  the  information  or  incentives  to  take  the  viewpoint 
of  the  industry.   The  first  alternative  of  sustained  below  "normal" 
returns  may  explain  part  of  the  behavior  of  som.e  open  access  or  comriion 
property  resource  industries,  especially  when  "normal"  returns  origi- 
nally are  based  on  acquisition  value  of  inputs  and  not  salvage  value 
(see  [9]).   The  second  alternative  may  contain  some  explanatory  power 
also  if  the  marginal  returns  indicated  do  not  (as  they  do  not  here) 
recognize  uncertainty.   That  is,  due  to  uncertainty,  firms  may  attempt 
to  maintain  a  ratio  of  value  marginal  product  to  input  price  that  is 
consistently  greater  than  one  so  that  the  ex  post  result  from  uncer- 
tainty planning  may  be  closer  to  the  value  marginal  product  expected  by 
the  individual  firm  than  is  predicted  by  theory  under  certainty. 
Although  these  factors  may  contribute  to  a  partially  stable  situation, 
they  do  not  lead  to  an  equilibrium  in  the  sense  of  equating  marginal 
factor  returns  with  marginal  factor  cost. 


31 
This  section  is  best  sumTnarized  by  presenting,  as  briefly  as 
possible,  the  conclusions  of  the  theory  of  open  access  resource  exploi- 
tation under  variable  prices,  i.e.,  where  input  and  product  prices  are, 
respectively,  functions  of  input  and  product  quantities.   A  given  incre- 
ment in  total  output,  dY   given  by  (2.75),  is  attributable  to  increments 

in  the  effort  of  established  firms,  E.  ,t  dX.  ,  as  well  as  in  effort  due 

1=1    it 

to  entry,  ^._,t  X.  /n  dn  ,  which  sum  to  give  the  total  increment  in 
effort,  dX  .   To  maximize  industry  revenue,  the  increment  to  total 
revenue  is  equated  to  the  increment  in  total  cost  or: 

(2.72)  (P   +  Y  dP   /dY  )  dY  =  (P   +  X  dP   /dX  )  dX 

yt    t   yt   t    t    ^  xt    t   xt   t^        t 

Individual  establislied  producers  see  their  marginal  products  as  a  func- 
tion of  their  effort  alone  and,  taking  price  as  constant,  collectively 
try  to  equate  marginal  revenue  product  to  marginal  factor  cost  as  given 
by  equation  (2.70).   Entrants,  who  enter  at  average  levels  of  produc- 
tivity and  average  effort  expenditure,  perceive  the  marginal  return  to 
entry  as  the  average  return  for  the  industry  or  P  Y  /n  and  the  mar- 
ginal cost  of  entry  as  the  average  cost  for  the  industry  or  P  X  /n  . 
(The  marginal  cost  of  a  unit  of  effort  from  expansion  by  established 
firms  is  assumed  to  be  the  same  as  the  marginal  cost  of  a  unit  of  effort 
by  entry.)   The  marginal  conditions  for  a  static  entry  situation  from 
the  individuals'  point  of  view,  are: 

(2.73)  Py^  Y^/n^  dn^  =  P^^  X^/n^  dn^ 

The  condition  that  established  industry  members  and  entering  firms, 
acting  as  individuals,  attempt  to  attain  is  given  by  the  sum  of  (2.70) 

a 

and  (2.73)  or: 

(2.74)  P^^  [l.Jlt    0Y,^/8X.^)  dX.^  +  (Y^/n^)  dn^]  =  P^^  [l.J^t   dX.^ 


32 

The  riglit-hand  side  of  (2. 74)  corresponds  to  the  riylil-hand  side  ol 

(2.72)  if  input  supply  is  assumed  to  be  infinite  at  a  constant  price 

(as  it  is  assumed  by  individuals).   The  left-hand  side  of  (2.74),  :n 

addition  to  considering  the  effect  of  a  change  in  output  on  output  price 

to  be  zero  (as  individual  producers  consider  it) ,  neglects  to  take  into 

account  the  depleting  effect  of  increased  effort  on  the  resource.   To 

equate  the  value  of  the  marginal  increment  in  output  for  the  industry 

to  the  cost  of  the  marginal  increments  in  effort  required  to  produce  it 

involves,  ignoring  price  effects,  satisfaction  of: 

(2.75)   P   dY  =  P    (E  "t  dX.   +  (X  /n  )  dn  ) 
yt   t    xt   1=1    It     t   t    t 

Theory  indicates  that  for  maximum  industry  profits  to  be  obtained 
(monopoly  and  monopsony  profits)  equation  (2.72)  must  be  satisfied  for 
the  industry.   The  competitive  industry  situation  (zero  profits,  normal 
returns  included  as  a  cost,  guaranteed  by  the  satisfaction  of  (2.73) 
under  freedom  of  entry)  is  realized  by  satisfaction  of  (2.75).   A  con- 
dition of  chronic  below-normal  returns  is  attained  when  individual 
producers  and  entrants  attempt  to  satisfy  (2.74).   The  crux  of  the 
problem  at  hand  is  that  individuals  involved  in  exploiting  an  open  access 
or  unregulated  common  property  resource  \>7ill  attempt  to  satisfy  equation 
(2.74),  resulting  in  chronically  low  returns  in  resource  industries 
involving  no,  or  ineffective,  ownership  of  the  resource.   The  ensuing 
chapters  will  be  concerned  with  determining  the  extent  of  possible  gains 
from  institutions  (policies)  designed  to  correct  the  problem  of  low 
returns.   Any  possible  gains  must,  of  course,  be  weighed  against  costs 
of  implementing  the  policies  necessary  to  attain  the  gain.   The  follow- 
ing section  describes  a  bioeconomic  model  of  a  fishery,  necessary  for 
empirical  work,  in  theoretical  terms. 


33 

Bloecouoinic  Theory  of  a  Fishery 

Earlier  sections  of  this  chapter  were  concerned  with  the  theoret- 
ical behavior  of  a  particular  year-class  in  a  closed  stock  of  fish  and 
with  the  theory  of  oiploitation  of  an  open  access  resource.   This  sec- 
tion combines  the  efforts  of  earlier  sections  into  a  bioeconomic  theory 
of  a  fishery  that  will  be  useful  in  analyzing  the  shrimp  industry.   For 
a  slightly  different  development,  and  one  that  incorporates  the  effects 
of  "vessel  crowding" — assumed  negligible  here — see  the  article  by 
V.  L.  Smith  [29]. 

Equation  (2.30a)  describes  the  weight  of  the  catch  from  a  partic- 
ular year-class  as  a  function  of  effort  and  the  biomass  of  the  year- 
class.   In  most  fisheries,  the  catch  is  actually  made  up  of  fish  from 
several  year-classes,  in  general  J  year-classes,  so  that  (2.30a)  should 
be  rewritten  in  terms  of  a  year-class  j  where  j  =  1,  ...»  J.   Equation 
(2.42)  gives  the  output  of  an  individual  producer  in  teinns  of  individual 
effort  and  resource  condition  while  equation  (2.62)  defines  the  output 
for  the  industry.   Modifying  and  combining  (2.30a),  (2.42),  and  (2.62), 
total  industry  output  is  seen  to  be  (2.76),  the  sum  over  individuals  of 
the  catches  from  different  year-classes. 

(2.76)   Y^  =  E.  ^t  Z.-^T  Y..(X.  .  B.J 
t     1=1   j=l   ij '  It'  2^ 

The  biomass  of  a  particular  year-class  is  (abstracting  from  the  effects 

of  varying  stock  density  on  growth  and  mortality  rates)  a  function  of 

the  growth  and  mortality  rates  natural  to  the  species ,  the  fishing 

mortality  the  year-class  has  suffered,  and  the  size  (in  numbers)  of  the 

parent  (spawning)  population  or  E._.   N    where  all  year-classes  at 

^  ^1  J  o 

least  as  old  as  j   are  spawners  and  t   is  the  "birth"  year  of  the  year- 
class  in  question. 


34 
Total  revenue  to  the  industry,  t>ie  sum  uf  total  revenues  to  indi- 
viduals, involves  tlie  product  of  the  weight  of  each  year-class  in  the 
catch  times  the  price  per  unit  v.'civ,ht  ccr.inianucd  hy  tlie  year-class  {for 
example,  different  size  shrimp,  corresponding;  to  different  ages,  hring 
different  prices  per  pound).   That  is: 

(2.77)    TR  =  I.    !}t  Z.^^    P  .^  Y..  (X.  .  B.J 
t    1=1   j  =  l  yjt   ij    It'   jt 

Total  cost  is  the  sum  of  individual  total  costs  as  given  by  the  product 
of  total  effort  (2.56)  and  price  per  unit  effort  P 


xt 


(2.78)    TC^  =  P  X  =  P   Z.  ^t  X 

t     xt  t     xt   1=1    It 


Demand  price,  P  .  ,  is  taken  to  be  a  declining  function  of  output  while 

yjt' 

input  price,  P   ,  is  assumed  to  be  an  increasing  function  of  input 
quantity.   However,  individuals,  and  the  industry,  are  assumed  to  treat 
prices  as  if  there  were  no  quantity  effects  on  prices,  thus  eliminating 
monopoly-  and  monopsony-type  price  effects.   For  equilibrium  to  occur  in 
the  industry,  the  value  of  increases  in  output  due  to  increases  in  effort 
must  exactly  offset  the  increase  in  costs  due  to  increases  in  effort  (due 
to  expansion  by  established  firms  and  entry).   Further,  the  value  of  an 
increase  in  effort  due  to  expansion  by  established  firms  (the  "intensive 
margin,"  see  [29])  must  equal  the  value  of  an  increase  in  output  due  to 
entry  in  order  for  stability  to  occur  on  the  "capital"  side  of  the  produc- 
tion system.   Stability  of  the  fish  stock  requires  that  decreases  in  the 
stock  due  to  fishing  and  natural  mortality  are  just  offset  by  the  sum  of 
increases  in  biomass  due  to  growth  in  weight  and  recruitment.   In  addi- 
tion, the  number  of  spawners ,  Z.  .   N.  ,  must  remain  constant  if  that 

number  is  equal  to  or  less  than  the  number  required  to  produce  the  maximum 
size  spawn  that  the  biological  system  will  support.   (For  example,  there 
may  be  some  number  of  eggs  above  which  further  egg  production  is  super- 
fluous so  far  as  maintaining  or  adding  to  the  adult  stock  is  concerned.) 


33 
At  some  level  of  net  revenue  (zero,  it  net  revenue  is  synonymous 
with  pure  profits  and  certainty  is  assumed)  equilibrium  may  occur  in 
the  fisbci-y  in  the  sense  that  increments  to  value  equal  increments  to 
cost  and  fish  stock  is  stable  (catch  equals  sustainable  yield  where 
sustainable  yield  is  that  yield  that  may  be  taken  in  perpetuity  without 
affecting  the  stock).   The  condition  (2.73)  applied  to  the  fisheries 
assures  that  the  net  revenue  level  at  industry  equilibrium  is  zero. 
Mathematically,  the  equilibrium  conditions  are  formed  by  setting  the 
total  derivative  of  net  revenue,  equation  (2.77)  less  equation  (2.78), 
equal  to  zero  and  satisfying  the  additional  constraints  that  the  time 
rate  of  change  in  biomass  is  zero  as  is  the  change  in  num.ber  of  spaw-ners. 
The  conditions  are: 


(2.79)    Z.  "t  l.\    P  .^ 
1=1   j  =  l  yjt 


^dY..  8y..   8b.  \ 

^  It      jt    It/ 


8Y..     Y..  9Y.. 

j_   iJt  .   xit  J  .    lit  ,^ 

+  3 — ^—  +  — ^-  dn^  +  ^p  ■'   dB_ 

dn^      n^     t  oB.^     it 

t       t  jt    -J 

-  P  ^  f  E   "t  dX.^  +  —  dn  I  =  0 

xt  \  1=1    It   n    t / 

(2.80)  Z/,  dB.   =  0 

(2.81)  Z/.   dN.   =  0 

While  (2.79)  represents  the  conditions  for  competitive  industry  equilib- 
rium (zero  profits),  individuals  do  not  take  into  account  the  indirect 
effects  of  their  actions  and  will,  as  pointed  out  in  the  preceding  sec- 
tion, attempt  to  expand  output  by  increasing  efforts,  thus  raising 
marginal  factor  costs  (by  raising  P  ^)  and  lowering  value  marginal  pro- 
ducts (by  lowering  P    ,  through  the  effect  of  diminishing  returns  to 
effort  and  through  depletion  of  the  resource) ,  resulting  in  the  left 


36 
side  of  (2.79)  being  less  than  zero.   If  (2.80)  and  (2.81)  are  satis- 
fied, (2.79)  may  be  persistently  below  zero,  the  negative  net  marginal 
value  products  being  absorbed  in  incomes  tc  the  fisheriaen  belovj  acqui- 
sition cost  incomes  (but  above  salvage  valr.e  ircomes)  . 

In  order  to  assure  equilibrium  by  satisfaction  of  (2.79),  some 
management  authority  need  only  levy  on  the  industry  a  tax  on  entry 
(license  fee,  L)  equal  to  the  value  of  the  reduction  in  output  caused 

by  entrants  or 

8Y..   8B.   9X 

(2.82)  L  =  E  "t  E.  .  P  .^  ~^3-J^^  dn^ 

1=1    1=1   yit  3B.    dX    dn     t 
-*     ■^-'     jt     t     t 

and  a  tax  on  individual  landings  (landings  fee,  D)  equal  to  the  reduc- 
tion in  value  caused  by  expansion  of  effort  by  established  firms  or 

(2.83)  D  =  Z  "t  E.^  P  _  -^-^^3-1^  dX.^ 

1=1   J=l  yjt  3B    dX^^   It 

where  P  .   is  the  prevailing  price  at  contemporaneous  industry  output. 
If  tax-incidence  problems  are  solved,  this  Pareto-ef f icient  competitive 
industry  equilibrium  is  as  optimal  as  any  other  Pareto-ef f icient  point. 
If  a  social  welfare  function  is  devised  that  acquiesces  to  the  consumer 
desires  expressed  in  the  demand  function,  then  this  equilibrium  is 
socially  optimal. 

Although  the  charges  needed  (L  and  D)  to  manage  a  fishery  in  an 
efficient  zero-profit  manner  can  be  specified  as  theoretical  aggregates, 
the  pattern  of  license  fees  for  vessels  of  varying  sizes  and  efficien- 
cies and  the  pattern  of  landings  fees  for  fish  of  different  sizes  and 
per  unit  values  are  not  so  readily  apparent.   For  heterogeneous  firms 
and  landings  sizes,  the  charge  levied  may  well  influence  the  pattern  of 
landings  sizes  and/or  the  characteristics  of  entering  firms.   The  direc- 
tion of  such  influence  is  not  obvious  from  the  static  considerations 
given  here  and  requires  modification  and  adaptation  of  the  theory,  by 


37 
specific  industry,  ivit.o  a  v;orkable  dynamic  model  capable  of  evaluating 
alternative  control  strategies  (policies).   The  theory  presented  here 
is  modified  and  extended  into  a  dyna:,!  i  c  model  capable  of  analyzing  the 
Gulf  of  Mexico  shrimp  industry  in  Chapter  III. 


CHAPTER  III 


GULF  OF  MEXICO  SHRIMP  INDUSTRY; 
DESCRIPTION  AND  MODEL 


The  Gulf  of  Mexico  shrimp  industry  may  be  divided  into  three  seg- 
ments.  The  basic  segment  is  formed  by  the  natural  shrimp  resource  and 
the  dynamics  of  its  population  behavior.   A  second  segment  is  the  fleet 
of  boats  and  vessels  that  is  involved  in  capturing  the  basic  resource. 
The  third  segment  consists  of  the  processing  and  marketing  channels  that 
facilitate  the  movement  of  shrimp  from  the  point  of  first  sale  at  dock- 
side  to  the  consumer's  table.   This  chapter  presents  a  brief  description 
of  the  Gulf  of  Mexico  shrimp  industry  and  then,  in  somewhat  more  detail, 
an  abstract  model  that  represents  the  essential  workings  of  the  industry. 

Description  of  the  Industry 

The  descriptive  portion  draws  heavily  on  work  done  at  the  University 
of  Florida  by  David  A.  Whittaker,  Jr.  [33],  C.  C.  Osterbind  and  R.  A. 
Pantier  [27],  and  Roy  L.  Lassiter  [22],  as  well  as  National  Marine 
Fisheries  Service  (formerly  Bureau  of  Commercial  Fisheries)  publications 
by  John  P.  Doll  [16]  and  Kenneth  W.  Osborn,  Bruce  W.  Maghan,  and  Shelby 
B.  Drummond  [26]  ,  and  a  dissertation  completed  at  the  University  of 
Rhode  Island  by  Richard  James  Berry  [7]. 

The  Gulf  Shrimp  Resource 

The  commercially  important  Gulf  shrimp  resource  is  comprised  largely 
of  three  species  of  shrimp:   brown  shrimp,  Penaeus  aztecus;  pink  shrimp, 

38 


39 
p.  duo r a rum;  and  white  shrimp,  P.  setiferus.   In  addition,  small  numbers 
of  a  smaller  shrimp  called  seabob ,  Xiphoponaeus  kroveri,  are  taken  near 
the  outlets  of  Louisiana  rivers.   The  royal  red  shrimp,  Hymenopenaeus 
robustus,  is  harvested  in  depths  of  from  200  to  300  fathoms  (one  fsthom 
equals  six  feet)  in  the  waters  off  the  east  and  southwest  coasts  of 
Florida  and  southv^est  of  the  Mississippi  River  Delta. 

The  Penaeus  species  have  similar  life  cycles  and  habits.   The 
adult  shrimp  spawn  offshore  and  the  larvae  make  their  way  back  into  the 
coastal  estuarine  systems,  V7here  they  develop  into  juvenile  shrimp. 
The  juvenile  shrimp  begin  to  migrate  back  to  the  open  sea  where,  upon 
reaching  adulthood  and  spawning,  the  cycle  is  completed.   Individual 
shrimp  may  live  from  eighteen  months  to  tvjo  years  and  reach  lengths  of 
170  mm.  (6.7  in.)  for  males  and  200  mm.  (7.9  in.)  for  females.   Shrimp 
are  generally  considered  an  annual  crop,  however,  and  are  harvested 
from  the  time  they  are  juveniles  in  the  estuaries.   Brovm  and  pink 
shrimp  are  nocturnal  in  habit  and  burrow  during  the  day  into  the  mud 
and  coral  silt  bottoms  which  they  respectively  seem  to  prefer.   Wliite 
shrimp,  on  the  other  hand,  are  active  during  daylight  hours  and  burrow 
into  the  mud  bottom  at  night. 

Brown  shrimp  are  found  in  heaviest  concentrations  along  the  Texas 
coast,  white  shrimp  along  the  Louisiana  coast,  and  pink  shrimp  off  the 
coast  of  Florida  near  the  Dry  Tortugas  and  Sanibcl  Island  and  in  the 
Gulf  of  Campeche  off  the  northwestern  coast  of  the  Yucatan  Peninsula. 
Figure  3.1  (after  Lassiter  [22,  p.  2])  depicts  the  seven  areas  of  the 
Gulf  of  Mexico  that  comprise  the  study  area  and  Table  3.1  gives  landings 
by  area  and  species  for  the  years  1967,  1968,  and  1969  (see  also  [2]). 
Together,  these  references  depict  the  recent  occurrences  of  shrimp  in 
commercial  harvests  and,  presumably,  the  distribution  of  the  various 
shrimp  species. 


AG 


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Pensacola,  Florida,  to  the  Mississippi  River 
Mississippi  River  to  Texas 

Texas  Coast  ^ 

High  Seas  Off  Mexican  Coast  West  of  Longitude  94 
High  Seas  Off  Obregon  and  Campeche 


Figure  3.1.  Major  Shrimp  Fishing  Areas  in  the  Gulf  of  Mexico 


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Table  3.2  transforms  the  aci.'j;-il  landings  of  Tdble  3.1  into  percent- 
ages of  total  landings  vhic]i  inore  rr.<-<dily  indicate  the  importance  of 
the  major  species  vjithin  areas,  their  relative  contribution  to  tota] 
landings,  and  the  relative  iripcrtance  of  tlie  seven  areas  in  their  con- 
tribution to  total  landings.   Differences  between  years  are  associated 
with  1)  differences  in  total  shrimp  abundance,  2)  differences  j'n 
relative  species  abundances,  3)  shifts  among  areas  in  shrjiup  concentra- 
tions, and  4)  changes  in  the  fishing  effort  applied  by  area  and  among 
years.   In  Table  3.3  the  results  of  Tables  3.1  and  3.2  are  averaged 
over  the  three  years.   Table  3.3  shows  brown  shrimp  to  comprise  about 
62  percent,  pink  shrimp  about  12  percent,  and  white  shrimp  about  25 
percent  of  average  total  landings.   Seabobs  and  royal  red  shrimp  comprise 
less  than  one  percent  of  total  landings  and  are  thus  net  considered 
further  in  this  study. 

Areas  III,  IV,  and  V,  where  brox-m  and  white  shrimp  concentrations 
are  found,  are  the  most  consistent  hea\^-producing  areas  with  Area  IV 
showing  the  greatest  concentration  of  white  shrimp  and  Area  V  the 
largest  concentration  of  brovm  shrimp.   Area  I  follows  in  importance 
and  contains  pink  shrimp  almost  exclusively.   The  high  seas  off  the 
Mexican  coast  (Area  VI)  produces  brown  shrimp  while  Obregon  and  Campeche 
(Area  VII)  produces  largely  pink  shrimp.   Area  II,  contributing  the 
smallest  amount  to  total  catch,  contains  all  three  species  in  roughly 
equal  numbers  although  pink  shrimp  may  be  slightly  more  abundant. 

A  word  of  caution  must  be  added  against  interpreting  Tables  3.1  - 
3.3  as  indicators  of  absolute  slirimp  abundance.   These  data  reflect 
commercial  landings  and  thus,  in  addition  to  the  availability  of  shrimp, 
they  reflect  the  shrimpers'  choice  of  where  to  fish.   The  fishermen's 
choice  of  trawling  area  is  influenced  by  bottom  conditions,  i.e.,  whether 


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45 
grass  is  present  or  the  bcttora  ic  scuddad  with  coral,  large  sponges  or 
other  obstructions,  and  distance  from  port.   Thus,  Tables  3.1  -■  3.3 
should  be  interpreted  as  indicating  conicercia] ly  important  concentra- 
tions of  shriap,  given  current  technology  and  knowledge  of  bottom 
conditions. 

In  addition  to  variation  by  area,  shrimp  concentrations  vary  in  a 
seasonal  pattern  by  species.   Osbcrn  et  al.  [26]  have  summarized  five 
years  of  data  (1959-63)  to  indicate  shrimp  concentrations  by  area, 
species,  and  month  of  year.   Their  findings  on  density  by  area  are 
roughly  the  same  as  those  presented  above.   The  seasonal  patterns  of 
abundance  of  the  three  species  are  such  that  shrimp  are  available  in 
heav^'  concentrations  the  year  round.   Brown  shrimp  concentrations 
support  a  summer  and  early  fall  fishery  vjith  80  percent  of  the  landings 
occurring  from  June  to  October  and  the  peak  catches  occurring  in  July 
and  August  [26,  p.  6],   Pink  shrimp  support  a  year-round  fishery 
although  landings  are  somewhat  lower  during  June  through  September  and 
peak  in  December  [26,  p.  14].   Nearly  80  percent  of  the  white  shrimp  land- 
ings are  made  in  the  fall  from  September  to  December  [26,  p.  10]. 

Although  all  three  species  of  shrimp  are  harvested  from  the  time 
they  are  juveniles  in  the  estuarine  systems  (inshore)  until  they  reach 
adulthood  offshore,  there  are  some  striking  differences  in  the  percent- 
ages of  the  various  species  landed  inshore  versus  offshore  and  in  the 
depths  of  landing.   For  the  study  period  1959-63,  [26]  found  that  80 
percent  of  the  brown  shrimp  landed  were  taken  offshore,  most  of  them 
in  water  between  11  and  30  fathoms  in  depth.   Ninety-eight  percent  of 
the  pink  shrimp  landed  were  taken  offshore  with  the  heaviest  concentra- 
tion (nearly  80  percent)  taken  in  11  -  20-fathom  depths.   In  contrast 
to  the  brown  and  pink  species,  42  percent  of  the  white  shrimp  landed 


AC) 
were  taken  in  inshore  waters.   By  depth,  iiliout.  90  percent  of  tlie  white 
shrimp  landed  \,'ere  taken  In  less  tVian  10  fatlsoins  of  vater. 

In  summary,  bro\n  shrirp,  Penaeus  aatecus,  are  n'.OGt  abundant  in  the 
summer  and  early  fall  in  the  offshore  waters  of  Texar. .  Louisiana,  and, 
to  a  lesser  extent,  Mississippi  and  Alabama,   Pink  sbrjrap  are  abundant 
at  all  times  except  the  late  summer  in  the  olfsliore  waters  of  south- 
western Florida  (Dry  Tortugas  and  Sanibel  Island)  and  tl;e  western  Yucatan 
Peninsula  (Obregon  and  Gulf  of  Carapeche) .   White  shrlii'p  are  most  abundant 
during  the  fall  of  the  year  about  equally  in  the  inshore  and  offshore 
waters  of  the  coast  of  Louisiana  and,  to  a  lesser  extent,  Mississippi 
and  eastern  Texas.   The  concentrations  of  shrimp  reported  here  doubtless 
reflect  activity  patterns  of  the  shrimp  fleet  in  that  they  are  inferred 
from  conunercial  landings.   However,  the  commercially  important  ccncen- 
trations  of  shrimp  would  seem  to  be  fairly  v?ell  indicated  by  these  data. 

The  Gulf  Shrimp  Fleet 

In  1966  there  were  7,739  boats  and  vessels  in  tJie  Gulf  shrimp 
industry  operated  by  13,756  regular  and  casual  fishermen.   These  7,739 
craft  were  equipped  with  9,969  otter  trawl  net  units  having  a  sweep 
capacity  of  141,472  yards  at  mouth  [23,  p.  645].   Tabic  3.4  contains  a 
breakdown  of  these  statistics  by  state  and  by  vessel  and  boat  fisheries 
for  1966. 

By  the  definitions  followed  by  the  U.S.  Department  of  Interior,  a 
boat  is  a  craft  of  less  than  five  net  register  tons  \,7l)ile  a  vessel  is  a 
craft  of  at  least  five  net  register  tons.   A  register  ton  is  a  volume 
of  100  cubic  feet  which  displaces  6,242.5  pounds  of  fresh  water  of 
maximum  density.   The  designation  "gross"  refers  to  register  tonnage 
calculated  from  the  volume  between  decks  below  tlie  tonnage  deck  and 


Table  3.4 

Sumniary  of 

shrimp  otter  trav/l 

boats,  vesse. 

Is,  fxshe 

;rinen , 

and  gear  in 

the  Gulf 

states,  1 

966 

Number 

Fishermen 

Otter 

Trawls 

Number 

Number 

Yds.  at 

State 

Boats 

Regular 

Casual 

Number 

Mouth 

Fla. ,  W.C. 

98 

142 

24 

99 

1,281 

Alabama 

203 

311 

43 

203 

3,900 

Boat 

Mississippi 

380 

178 

285 

380 

3,680 

Fishery 

Louisiana 

3,261 

2,919 

1,220 

3,305 

42,016 

Texas 

861 

772 

406 

861 

9,149 

Total,  excl. 

of  dupl. 

4,797 

4,312 

1,978 

4,842 

59,942 

Vessels 

Fishermen 

Otter 

Traxjls 

Gross 

Yds.  at 

State 

Number 

Tonnage 

Number 

Number 

Mouth 

Fla. ,  W.C. 

886^ 

43,686 

2,140 

1,664 

25,912 

Alabama 

366 

14,050 

882 

598 

9,730 

Vessel 

Mississippi 

410 

16,835 

1,020 

665 

10,878 

Fishery 

Louisiana 

1,342 

59,007 

3,524 

2,354 

37,289 

Texas 

1,409 

77,348 

3,787 

2,646 

41,697 

Total,  excl. 

of  dupl. 

2,942 

132,149 

7,466 

5,127 

81,530 

Boats  and  Vessels 

Fishermen 

Otter 

Trawls 

Yds.  at 

State 

Number 

Number 

Number 

Mouth 

Total 

Fla. ,  W.  C. 

984 

2,306 

1,763 

27,193 

(Boat 

Alabama 

569 

1,236 

801 

13,630 

and 

Mississippi 

790 

1,483 

1,045 

14,558 

Vessel 

Louisiana 

4, 

,603 

7,663 

5,659 

79,305 

Fishery) 

Texas 

2, 

,270 

4,965 

3,507 

50,846 

Total,  excl. 

of  dupl. 

7 

,739 

13,756 

9,969 

141,472 

Printed  as  386,  apparently  a  misprint. 

Source:  Fishery  Statistics  of  the  United  States,  1966,  Stat.  Dig. 
No.  60,  U.  S.  Dept.  of  the  Int.,  Fish  and  Wildlife  Service,  Bureau  of 
Commercial  Fisheries,  1968. 


II 4.  II 


A  8 
within  permanent  structures  above  the  tonnage  deck,  while  the  "net' 
designation  refers  to  the  gross  tonnage  adjusted  for  cei^tain  allowable 
exemptions.   A  regular  fisherman  earns  more  than  half  his  income  from 
fishing  while  a  casual  fisherman  earns  less  than  half  his  income  from 
fishing.   An  otter  trawl  net  (see  Figure  3.2)  is  designed  to  be  towed 
along  the  bottom,  collecting  shrimp  at  the  mouth  and  funneling  them 
into  the  cod  end  of  the  net. 

Table  3.4  indicates  that  there  are  2,942  vessels  in  the  Gulf  shrimp 
industry  manned  by  7,466  regular  fishermen.   These  vessels  operate  5,127 
otter  trawl  net  units  having  a  combined  sv;eep  of  81,530  yards  at  mouth. 
Since  each  vessel  operates  either  one  or  tv;o  net  units,  there  must  be 
(5,127  -  2,942)  =  2,185  double  rig  vessels  operating  4,370  net  units  and 
(2,942  -  2,185)  =  757  single  rig  vessels  operating  757  net  units. 
Assuming  single  rig  net  units  are  twice  as  large  across  the  mouth  as 
double  rig  net  units  [26,  p.  4],  there  are  4,370  +  2(757)  =  5,834  double 
rig  net  unit  equivalents  operating  in  the  Gulf  shrimp  industry  measuring 
81,530  yards  at  mouth.   The  average  double  rig  net  unit  is  13.86  yards 
(41.58  feet)  across  the  mouth  v/hile  a  single  rig  net  unit  is  27.72  yards 
(83.16  feet)  across  the  mouth.   The  average  vessel  in  the  Gulf  shrimp 
industry  tows  nets  having  a  sweep  capacity  of  27.72  yards  (83.16  feet) 
across  the  mouth.   In  addition  to  the  main  nets,  each  vessel  usually 
carries  a  ten-foot  try-net  used  to  locate  profitable  shrimp  concentra- 
tions before  the  main  nets  are  deployed. 

The  distribution  of  vessels  by  states  as  shown  in  Table  3.4  corre- 
sponds closely  to  the  distribution  of  landings  by  areas.   Louisiana  and 
Texas  (Areas  IV  and  V)  lead  in  number  of  vessels  and  landings  followed 
by  Florida  (Areas  I,  II,  and  to  a  large  extent  VII  so  far  as  vessels  are 
concerned)  and  Mississippi  and  Alabama  (Area  III).   Landings  from 


49 


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50 
Area  VI  are   probably  largely  accounted  for  by  Texfs  Vfi.ssels  while 
landings  from  Area  VII  are  accounted  for  by  Florida  and,  to  a  lesser 
extent,  Texas  vessels.   Tabic  3.5  indicates  the  relative  size  composi- 
tion of  the  fleets  landing  shrimp  in  each  state.   The  vessels  landing 
catches  in  Alabama,  Mississippi,  and  Louisiana  tend  to  be  relatively 
smaller  than  those  landing  catches  in  Texas  and  Florida. 

Tliere  are  4,797  boats  in  the  Gulf  shrimp  industry  (Table  3.4)  of 
which  the  majority  (3,261)  arc  based  in  Louisiana.   Florida  has  the 
smallest  number  of  boats  (98).   These  4,797  boats  are  manned  by  4,312 
regular  and  1,978  casual  fishermen  and  carry  4,842  otter  trawl  net  units 
with  a  sweep  capacity  of  59,94  2  yards  at  mouth.   Assuming  single  rig 
nets  are  twice  as  large  as  individual  double  rig  nets,  there  are  530 
double-rigged  boats  equipped  to  tow  tv7o  nets  having  a  width  at  mouth 
of  6.25  yards  (18.75  feet)  each.   The  majority  of  boats  are  single- 
rigged,  towing  one  net  having  a  sweep  capacity  of  12.5  yards  (37.5  feet) 
at  mouth. 

Many  boats  are  manned  by  casual  fishermen  who,  as  a  primary  source 
of  income,  either  engage  their  boats  in  another  fishery  or  leave  their 
boats  idle  and  take  jobs  as  shore  workers  or  crew  on  craft  employed 
outside  the  shrimp  industry.   As  Table  3.4  indicates,  the  largest 
numbers  of  casual  fishermen  are  found  in  Louisiana  and  fish  the  highly 
seasonal  (late  fall)  white  shrimp  resource  in  the  inshore  or  near  off- 
shore waters.   Alternative  maritime  employment  for  the  Louisiana  casual 
fisherman  is  available  on  oil  company  tugboats  and  service  boats  [22, 
p.  39]. 

Although  boats  outnumber  vessels  in  the  Gulf  shrimp  industry, 
vessels  represent  the  most  important  segment  of  the  industry,  so  far  as 
fishing  capacity  is  concerned,  controlling  51.4  percent  of  the  nets  and 


51 


Table 

3 

.5. 

Summary  of 
by  tonnage 

shriir.p 
groups. 

otter 
,  1966 

trav/1  vess< 

-Is  of 

tlie 

Gulf 

states 

5 

•OSS 

mage 

Number 

by 

State 

Gi 

Tor 

11a.  , 

W.C.    Alabama 

Miss: 

Lssippi 

Lo> 

aisinna 

T( 

ixas 

Total, 
of  d 

excl. 

up]  . 

5 

- 

9 

38 

30 

7 

41 

22 

122 

10 

- 

19 

89 

88 

62 

235 

138 

512 

20 

- 

29 

41 

42 

83 

166 

83 

318 

30 

- 

39 

134 

56 

71 

167 

124 

370 

40 

- 

49 

152 

45 

58 

176 

161 

374 

50 

- 

59 

78 

29 

38 

141 

154 

264 

60 

- 

69 

217 

28 

51 

231 

392 

531 

70 

- 

79 

69 

24 

19 

113 

191 

239 

80 

- 

89 

22 

3 

9 

32 

52 

73 

90 

- 

99 

40 

9 

7 

23 

66 

93 

100 

- 

109 

3 

— 

3 

9 

16 

23 

110 

- 

119 

2 

3 

1 

2 

5 

9 

120 

- 

129 

1 

6 

— 

4 

4 

9 

130 

- 

139 

— 

3 

— 

2 

— 

3 

160 

- 

169 

— 

— 

— 

— 

1 

1 

190 

- 

199 

— 

— 

1 

— 

— 

1 

Total 

vesse] 

.s 

886 

366 

410 

L,342 

1 

,409 

2 

,942 

Total  gross 

tonnage    43,682  14,050     16,835 


59,007   77,348 


132,149 


Source:   Fishery  Statistics  of  the  United  States,  1966,  Statistical 
Digest  No.  60,  United  States  Department  of  the  Interior,  Fish  and  Wildlife 
Service,  Bureau  of  Commercial  Fisheries,  1968. 


52 

57.6  percent  of  tlie  sweep  capacity.   In  terms  of  utilization,  che  vessel 
fleet  probably  accounts  for  a  larger  percentage,  of  the  catch  than  the 
percent  of  sweep  capacity  indicates  since  nearly  all  the  vessels  fish 
on  a  year-round  basis.   To  the  extent  that  the  offshore  vessel  fleet 
catch  is  of  larger  shrimp  than  the  boat  fleet  catch,  the  vessel  fleet 
accounts  for  an  even  larger  proportion  of  the  value  of  the  shrimp  catch 
since  larger  shrimp  are  more  valuable. 

As  for  profitability  of  operation  of  the  fleet  and  of  vessels  ver- 
sus boats,  no  data  are  available  on  boat  operations  since  statistics 
are  not  gathered  separately  for  boats.   Table  3.6  presents  costs  and 
returns  for  a  typical  offshore  Gulf  shrimp  vessel  (see  also  [3]).   The 
"return  to  management  (gross  return  less  all  costs)"  or  net  return  is 
negative  in  this  case.   As  shown  in  Table  3.6,  this  negative  net  return 
may  serve  to  reduce  owner  share  as  in  "return  to  investment"  or  operator 
share  as  in  "return  to  labor  and  management."  Caution  must  be  used  in 
applying  these  figures  to  vessels  in  different  size  classes  or  ultra- 
modern vessels  of  different  efficiency. 

C.  C.  Osterbind  and  R.  A.  Pantier  [27]  and  Roy  L.  Lassiter  [22] 
present  and  analyze  data  from  the  1950 's  and  early  1960 's  on  costs  and 
returns  in,  and  utilization  of  the  Gulf  shrimp  fleet.   These  studies 
are  valuable  for  a  historical  review  as  is  the  more  recent  Basic 
Economic  Indicators:   Shrimp,  Atlantic  and  Gulf  [1]  published  by  the 
National  Marine  Fisheries  Service. 

A  feature  of  shrimp  vessel  operation  bearing  on  costs  and  returns 
and  adequately  described  elsewhere  [27,  33]  is  the  "share  system."  The 
"share  system"  is  an  arrangement  whereby  captain  (whether  or  not  he  is 
the  vessel  owner)  and  crew  share  in  the  proceeds  of  the  catch — and  in 
part  of  the  variable  trip  cost — in  lieu  of  guaranteed  salaries.   Under 


t; 


3 


Table  3.6.   Marino  economics  data  -  65-foot  GnTi  of  Mexico  shrimp 
vessels 


Vessel  Description;   65  feet,  SO  gross  tons  and  3-man  crew  (1967-1968 
data) 

Expected  Production  and  Prices;   183  fislnug  diys,  100,000  pounds  (50 
tons)  shrimp  at  $.  69'4/pound  . 

Shrimp 
Variable  Costs  Season  Total 

Vessel  Repair  $   5,798 

Gear  Repair  5,450 

Fuel  4,655 

Galley  2,269 

Ice  1,456 

Other  1,190 

Crewshare  16,553 

Operator  Share^  8,276 

Total  Variable  Costs  $  45,647 

Fixed  Costs 

Interest  on  Investment  (8%)  $   9,168 

Depreciation^  8,604 

Insurance  ,              3,791 

Interest  on  Operating  Capital  (1/2  of  10%)              2,188 

Administrative  2 ,597 

Total  Fixed  Costs  $  26,348 

Summary 

Variable  and  Fixed  Costs  $  71,995 

Gross  Returns  69,400 

Gross  Returns  Less  Variable  Costs  23,753 
Return  to  Management  (Gross  Returns  Less 

All  Costs)  -2,595 
Return  to  Investment  (Return  to  Management 

Plus  8%  of  $114,600)  6,573  (5.7%) 
Return  to  Labor  and  Management  (Return  to 

Management  Plus  Operator  Share)  5,681 

Captain's  commission  and  wages  actually  received. 

Interest  is  charged  against  all  investment  and  average  operating 
capital  whether  or  not  borrowed.   Investment  is  based  upon  returns  to 
the  vessel,  a  15-year  useful  life  and  a  12  percent  discount  rate  as 
determined  by  the  National  Marine  Fisheries  Service  and  for  this  vessel 
is  $114,600. 

Depreciation  is  not  standardized  as  in  other  marine  economics  data 
sheets  but  is  as  given  in  Working  Paper  No.  57  [1]. 

Source;   Marine  Advisory  Program,  Sea  Grant,  Oregon  State  University, 
Corvallis,  Oregon.   Prepared  February  1971  from  Working  Paper  No.  57, 
[1]  Division  of  Economic  Research,  National  Marine  Fisheries  Service 

[3]. 


54 

the  share  arrangement,  the  captain  and  crew  receive  a  percentage  of  tb.e 
value  of  the  catch,  this  percentage  varying  over  vesf^els  and  portG  and 
according  to  whether  or  not  the  captain  is  the  vessel  oumer.   The  share 
of  the  captain  and  c.vc\^   in  variable  codLs  usually  includes  food  and  gear 
(net)  repair,  these  costs  being  deducted  from  crew  share.   The  obvious 
advantages  of  this  arrangement  are  that  it  gives  the  cre\.'  an  incentive 
to  maximize  catch  while  holding  down   certain  variable  costs  that  are 
directly  dependent  on  crew  performance.   The  share  system  also  guarantees 
short-run  profit-maximizing  behavior  by  a  captain  who  is  not  the  vessel 
owner  and  does  not  encourage  loyalty  of  the  crew  to  their  emplo^'er. 
Such  behavior  may  be  at  odds  with  the  longer-run  interests  of  the  vessel 
owner.   Since  the  share  system  is  widely  used,  apparently  many  vessel 
owners  feel  that  the  advantages  outweigh  the  disadvantages. 

Francis  J.  Captiva  in  a  recent  paper  on  "Changes  in  Gulf  of  Mexico 
Shrimp  Trawler  Design"  [10]  describes  the  recent  shift  in  the  Gulf 
shrimp  industry  to  slightly  larger  vessels  (80  to  100  feet)  of  stee]  , 
fiberglass,  or  aluminum  construction  in  place  of  the  tradition.il  wooden 
vessel.   He  describes  the  newly  constructed  vessels  as  being  higher 
powered  (from  400  up  to  750  horsepower  as  compared  to  150  -  200  horse- 
power on  older  vessels)  with  more  comfortable  crew  quarters  and  more 
mechanized  gear-handling  and  processing  equipment,  as  well  as  design 
oriented  toward  diversification  to  allow  handling  various  gears  with 
little  or  no  equipment  modification.   Modern  electronic  aids  installed 
in  duplicate,  power  steering  with  automatic,  hand  and  remote  controls, 
powerful  remotely  controlled  trawl  winches,  and  relocation  of  the  con- 
trol bridge  to  provide  a  better  view  of  the  working  deck  are  attributes 
of  many  of  the  newly  constructed  vessels.   Mr.  Captiva  envisions  in  the 
future  an  even  larger  vessel  (150  feet  in  length)  incorporating  computer 


55 
designed  hull,  the  capability  Lo  handle  a  v;idp.  variety  of  gears,  new 
concepts  in  pi-opulsion  and  auxiliary  pDv;er  (specifically,  a  diesel- 
electric  or  gas  turbine-electric  syr.ten)  and  otlior  innovations.   This 
"dream"  vessel,  \7ith  its  increased  hold  and  supply  space  and  mechanized 
processing  and  freezing  equipment,  could  serve  as  a  motber-ship-catcher- 
ship,  towing  tour  electro-shrimp  trawls  simultaneously. 

While  changes  in  vessel  design^  equipnient,  and  fishing  techniques 
must  meet  the  test  of  economic  efficiency  as  well  as  technical  feasi- 
bility, there  are  two  recent  developments  that  may  be  important  for  the 
Gulf  shrimp  industry.   One  of  these  concerns  the  development  of  the 
electro-shrimp  trawl,  which  uses  pulsed  electric  current  to  force  shrimp 
up  from  their  burrows,  thus  permitting  24-hour  per  day  fishing  with  an 
increase  in  catching  efficiency  over  the  conventional  trawl.   Adoption 
of  the  electro-shrimp  trawl  by  the  Gulf  shrimp  fleet  would  have  the 
effect  of  greatly  increasing  the  potential  effort  (measured  in  24-hour 
periods  spent  in  actual  fishing)  of  the  fleet  since  vessels  could, 
theoretically,  fish  continuously  once  they  reached  the  fishing  grounds 
and  found  profitable  concentrations  of  shrimp.   The  other  development 
concerns  the  discovery  that  royal  red  shrimp  concentrate  about  the  49°F 
thermocline.   By  locating  the  49''F  thermocline  and  fishing  at  that 
depth,  improved  catches  of  royal  red  shrimp  can  be  made  [4].   The 
Expendable  Bathythermograph  System,  originally  developed  for  use  by 
the  U.  S.  Navy  in  locating  the  thermocline,  is  currently  being  used  in 
experiments.   Its  cost  apparently  prohibits  commercial  adoption.   The 
development  of  economically  feasible  gear  with  which  to  locate  thermo- 
clines  should  lead  to  greater  utilization  of  the  royal  red  shrimp 
resource,  thus  expanding  the  shrimp  supply. 


56 

Processing  and  Mai']'.rtin.o,  Ilia  Gull"  Slirimp  Catch 

Shrimp  processing  begins  on  hoard  tht^.  catching  vessel  v.'he7;e  shrimp 
arc  beheaded  (thus  losing  about  38  percent  of  their  body  weight).   They 
are  then  packed  in  ice  or,  on  some  of  the  larger  modern  vessels,  frozen 
in  five-pound  cartons  for  direct  marketing  or  in  blocks  for  later  thaw- 
ing  and  further  processing.   An  exception  occurs  when  heavy  shrimp 
concentrations  are  located  and/or  fishing  is  close  to  shore.   Under 
these  conditions,  the  catch  rate  may  be  so  high  that  beheading  on  board 
requires  more  fishing  time  than  does  returning  the  shrimp  to  shore.   In 
this  case,  shrimp  may  be  iced  down  whole  and  beheaded  during  shoreside 
processing. 

Once  the  domestic  shrimp  catch  is  ashore,  most  of  it  is  sold  as 
raw  material  to  processing  plants  either  directly  or  through  "packing 
houses"  which  assemble  shrimp  for  sale  to  processors.   Figure  3.3 
presents  a  detailed  analysis  of  shrimp  processing  and  marketing  channels. 
About  80  percent  of  the  U.  S.  shrimp  catch  is  processed  as  a  frozen 
product  while  the  remainder  is  canned  or  dried.   Much  of  the  Pacific 
coast  catch,  especially  Alaska's,  as  well  as  part  of  the  New  England 
catch  is  processed  into  canned  or  dried  products.   Thus  at  least  80 
percent  of  the  Gulf  shrimp  landings  may  be  said  to  enter  the  frozen 
product  market.   The  frozen  shrimp  are  converted  into  three  major  prod- 
uct forms:   raw  headless,  breaded,  and  peeled  and  deveined,  in  order  of 
importance,  with  raw  headless  accounting  for  about  40  percent  and  the 
latter  categories  about  30  percent  each  of  the  weight  of  raw  headless 
shrimp  processed  into  these  products  in  1969.   According  to  Miller 
et  al.  [2A,  p.  29]  trends  indicate  that  breaded  and  peeled  and  deveined 
products  will  account  for  a  growing  share  of  the  frozen  shrimp  total  at 


57 


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the  expense  of  raw  headless.   Thei^e  propoi' tj.oDy  do  not  I'nit:  i  r.lljy  liold 
for  imported  shrluip,  v;liich  u\.\de   up  aboni;  53  percent  of  the  total  of 
imported  and  doicestic  landL^igs  in  recent:  years  [30].   Upon  importation, 
about  90  percent  of  tb.e  foreign  shriinp  are  in  raw  headless  or  peeled 
and  deveined  form.   Part  of  the  imports  are  further  processed  in  U.  S. 
plants  so  that  the  distribution  of  iraported  shrimp  in  final  product 
form  is  about  the  same  as  for  domestic  shrimp.   To  the  consumer,  imported 
shrimp  are  indistinguishable  from  domestic  shrimp  other  than  by  designa- 
tion of  place  of  origin  on  branded  products. 

Shrimp  products  are  readily  accepted  by  consumers.   Miller  et  al. 
[24,  p.  45]  report  that  the  retail  demand  for  shrimp  is  price  inelastic, 
a  rise  in  price  being  associated  with  a  less  than  proportionate  decline 
in  quantity  demanded.   The  retail  demand  for  shrimp  is  reported  to  be 
income-elastic  [24,  pp.  45,  46];  i.e.,  an  increase  in  income  is  asso- 
ciated with  a  more  than  proportionate  increase  in  quantity  demanded. 

The  Gulf  shrimp  industry  falls  more  or  less  naturally  into  the 
three  segments  or  subsectors  described  briefly  above.   While  description 
may  be  interesting  and  is  important  in  gaining  a  x-jorking  knowledge  of 
the  industry,  it  does  not  provide  a  firm  base  for  management  or  policy 
decisions.   The  following  section  outlines  an  abstract  model  of  the 
shrimp  industry  that  may  serve  as  the  basis  for  policy  and  management 
decisions. 

A  Model  of  the  Gulf  Shrimp  Industry 

Following  the  precedent  set  in  earlier  sections  of  this  chapter, 
the  model  developed  here  will  follow  the  general  subdivisions  of  "Gulf 
shrimp  resource,"  "Gulf  shrimp  fleet,"  and  "processing  and  marketing." 
The  model  is  designed  to  be  used  to  provide  simulated  output  of  variables 


59 
of  interest  over  time  and,  as  will  be  apparent,  is  designed  specif iciilly 
for  the  Gulf  shrimp  resource  v/ith  data-imposed  restrictions  clearly  in 
mind. 

A  Model  of  the  Gulf  Shrimp  Resource 

All  three  shrimp  species  considered  here — brown,  pink,  and  white- 
are  landed  at  ports  in  each  of  the  seven  statistical  reporting  areas 
(see  Figure  3.1  and  Table  3.3)  and  must  be  presumed  to  be  found  in  these 
areas.   However,  each  species  has  different,  specific  seasonal  charac- 
teristics with  respect  to  abundance  so  that  each  species  must  be 
considered  separately.   In  addition,  there  are  differences  in  growth 
rates  betv/een  sexes  of  shrimp  [7,  p.  93]  so  that  males  and  females  m.ust 
be  considered  separately  with  respect  to  their  effect  on  size  compcsi- 
tion  of  a  particular  recruit  class.   Berry  [7,  p.  29]  indicates  that 
there  is  no  spawTier-recruit  relationship  operative  on  the  Tortugas 
shrimp  grounds  and  the  simplest  assumption  is  that  there  is  no  spawner- 
recruit  relationship  operative  in  other  areas  of  the  Gulf  as  well. 
However,  Berry  [7,  p.  5A]  does  note  that  apparent  fluctuations  in  shrimp 
abundance  are  similar  among  species  and  result  from  environmental 
changes  affecting  large  parts  of  the  Gulf.  , 

The  problem  is  to  devise  a  model  that  will  reflect  the  seasonal 
pattern  of  recruitment  of  different  species  in  different  areas  of  the 
Gulf,  as  well  as  allow  for  inter-period  randomness  in  the  size  of 
recruit  classes.   In  addition,  the  model  must  include  the  effect  of 
natural  and  fishing  mortality  and  the  differential  growth  rates  between 
sexes.   The  assumption  is  made  that,  at  any  point  in  time,  the  shrimp 
stock  is  equally  divided  in  members  between  the  sexes.   Drawing  on  the 
theory  presented  in  Chapter  II,  the  following  variables  are  defined: 


60 

R.    =  Size,  in  nuwbcirs,  of  recruit  clatis  of  species  i  (i  =  1,  2, 

3  for  brovm,  pink,  c-md   white  shrimp,  respectively)  in  area 

j  (j  =  I,  ...,  VII,  see  Figure  3.1)  considered  recruited  at 

the  end  of  time  period  k  (k  =  ] ,  . . . ,  T  where  T  defines  an 

arbitrary  time  horizon). 

N.    =  Number  of  shrimp  remaining  of  species  i  in  area  j  of  recruit 

class  R. .,  at  the  end  of  interval  t  (t  =  1,  . . . ,  T) .   Then 
xjk 

t  -  k  is  the  elapsed  time  since  shrimp  in  recruit  class  R... 

were  "recruited"  or  t  -  k  represents  their  "age"  in  the 

fishery. 
W. .,    =  Weight  of  shrimp  of  species  i  and  sex  m    (m  =  ],  2  for  female 

and  male,  respectively)  in  area  j  of  "age"  t  -  k. 
F...   =  Fishing  mortality  coefficient  measured  as  a  pure  number  per 

time  period  applying  to  species  i  in  area  j  of  age  t  -  k 

during  time  period  t. 
M. .,   =  Natural  mortality  coefficient  measured  as  a  pure  number  per 

time  period  applying  to  species  i  in  area  j  of  age  t  -  k 

during  time  period  t. 

B..   =  Biomass  of  species  i  in  area  i  at  the  end  of  time  interval 
ijt  *^  -^ 

t. 

X   =  Standardized  units  of  effort  expended  in  area  j  during 
interval  t . 
By  assuming  shrimp  numbers  to  be  equally  divided  between  the  sexes  and 
shrimp  to  survive  in  the  fishery  for  T^  time  periods,  B.   may  be 


expressed  in  terms  of  N.  .,   and  W.  .,    as; 

ijkt  ijkmt 

2 


B..      =    (1/2)Z,  ^     ^     Z      ,    N..,       W.., 
ijt        ^   '    ^   k=t-T       m=l      ijkt      ijkmt 


61 


Tlie  important  relationships  required  are  tho.je  relating  (1)  the  fishing 
mortality  coefficient  and  effort,  (2)  L]ie  survival  characteristics  (in 
numbers)  of  a  recruit  class,  and  (3)  the  £,rox^/th  (in  x>;eight)  character- 
istics of  a  recruit  class.   The  fishin?;  rportality  coefficient  (F.  ,  ) 
is  assumed  to  be  a  direct  linear  function  of  the  effort  expended  in  the 
area  after  shrimp  reach  some  age  in  the  fishery,  say  V,  and  zero  before 
this  age. 
(3.1)     F..^^  =0    ,    t  -  k  <  V 

Number  of  shrimp  surviving  at  the  end  of  interval  t  is  a  declining  expo- 
nential function  of  the  mortality  rates  and  the  number  present  at  the 
beginning  of  period  t  (end  of  period  t  -  1),   The  number  surviving  when 

t  =  k  is  the  original  recruit  class,  that  is  N..,,  =  R. .,  . 

ij  kk    J.J  K 


-<^jkt  +  "ijkt) 


(3.2)    N..,   =  N.  .,   ,  e 
ijkt    ijkt-1 


The  weight  of  an  individual  of  age  t  -  k  is  given  by; 


(3.3)    W. 


1  -  e 


32i 


(t-k)  +  B.., 


33i 


ijklt    31ij 
for  females  and  for  males  is  given  by: 


P^/, 


34i 


(3.4)    W. 


1  -  e 


^42i(^-^)  -*■  \31 


3 


44i 


ijk2t    41ij  L 

Shrimp  are  classified  commercially  according  to  number  of  tails  per 
pound.   If  individual  weight  is  measured  in  pounds,  then  the  reciprocal 
of  W. .,    times  a  factor  to  arrive  at  heads-of f  weight  represents 
number  of  tails  per  pound. 

Given  size  of  recruit  classes  and  effort,  equations  (3.1)  -  (3.4) 
and  aggregations  of  these  equations  describe  the  behavior  of  the  shrimp 
population  in  the  Gulf  in  terras  of  numbers  and  weight.   In  addition,  a 


62 
policy  variable  is  provided  by  V,  tlie  ape  in  tlic-.  fishery  at  v/hich  shrimp 
begin  to  be  subjected  to  fishing  mortality.   The  variable  V  may  be 
manipulated  by,  for  example,  restrictions  on  mesh  size,  closed  seasons 
or  areas,  or  any  combination  of  these  uieasures.   Variability  in  the  model 
comes  in  the  form  of  inter-period  variation  in  sizes  of  recruit  classes 
and  varying  fishing  effort.   The  effort  expended  provides  a  link  betvjeen 
the  basic  shrimp  resource  and  the  harvesting  sector,  the  Gulf  shrimp 
fleet. 

A  Model  of  the  Gulf  Shrimp  Fleet 

The  craft  in  the  Gulf  shrimp  f].eet  may  be  divided  into  H  size 
classes,  vessels  in  each  size  class  having  a  different  sv-;eep  capacity 
and,  possibly,  different  cost  characteristics.   Larger  vessels  usually 
have  greater  sweep  capacity  and  a  day  spent  trawling  by  a  vessc]  of  2X 
yards  sweep  capacity  may  be  considered  as  contributing  roughly  twice  as 
much  to  fishing  mortality  as  a  day  of  trawling  time  by  a  vessel  having 
X  yards  of  sweep  capacity.   Thus,  an  arbitrarily  chosen  "standard" 
vessel  size  class  having  a  "standard"  sweep  capacity  may  be  established 
and  the  days  spent  trawling  by  vessels  in  other  size  classes  may  be 
adjusted  by  the  ratio  of  sweep  capacity  of  the  vessel  size  class  in  ques- 
tion to  that  of  the  "standard"  class.   Thus,  the  model  of  the  harvesting 
sector  must  be  able  to  aggregate  effort  of  diverse  vessel  size  classes 
into  the  single  effort  index  required  by  the  basic  resource  sector  model. 
In  addition,  the  harvesting  sector  model  must  specify  catch  and  gross 
revenue  of  vessels  in  each  size  class.   Since  prices  vary  according  to 


Effort  data  are  available  in  "days  fished" — 24-hour  periods  spent 
in  actual  fishing  activity. 


63 

size  of  shrimp  (as  expressed  in  tails  per  pound)  the  size  composition 

of  the  catch  must  be  knovm.   In  addition,  cost  per  unit  of  effort  is 

required  to  derive  a  measure  of  profitability.   Profitability  must  be 

related  to  the  intensity  of  fishing  effort  and  to  the  entry  and  exit  of 

fishing  vessels  to  areas  and  the  industry  in  order  to  determine  effort 

vhich  is  needed  as  an  input  to  the  basic  resource  sector.   The  interface 

between  the  harvesting  sector  and  the  marketing  and  der..and  sector  is 

characterized  by  the  weight  and  size  composition  of  the  catch  and  the 

ex-vessel  price,  by  size  class,  paid  for  the  catch. 

The  following  variables  delineate  the  factors  to  be  considered  in 

a  model  of  the  Gulf  shrimp  fleet: 

C   ,   =  Catch  (in  numbers)  of  a  craft  of  size  class  h  (h  =  1,  ...» 
hijkt 

H)  of  species  i  in  area  j  of  recruit  class  R- -j.  (^ge  in 


fishery  t  -  k)  during  interval  t. 


Y      =  (1/2)2  ^,  C,  ..,   W..,    =  weight  of  catch  C,  ...  . 
hijkt    ^   '^   m=l  hijkt   ijkmt      ^  hijkt 

P     =  Price  per  pound  of  shrimp  in  area  j  of  age  t  -  k  and  sex  m 
jkmt 

and  thus  of  count  per  pound  1/a  W.  .,    vjhere  a  is  a  factor 
to  convert  to  headless  weight. 

^\jt  =  (^/2^^i=l  \=t-T^  Cl  ^jkmt  Sijkt  ^^jkmt 

=  Gross  revenue  of  a  craft  of  size  class  h  in  area  j  during 

period  t. 
X^.   =  Effort  in  24-hour  periods  (days  fished)  spent  in  actual 

fishing  activity  by  a  vessel  of  size  class  h  in  area  j 

during  interval  t. 
n,    =  Number  of  craft  of  size  class  h  fishing  in  area  j  during 

interval  t. 

n,.    =  Number  of  craft  of  size  class  h  with  home  port  in  area  j 
Ihjt 

during  interval  t. 


64 

n„,  .   =  New  vessels  of  si'/.c   class  h  having  lioine  port  in  area  j 
2njt 

entering  fleet  at  beginning  of  time  interval  t  so  that 

"ihjt  =  "lhjt-1  '""2hjt 

S    =  Sx.7eep  capacity  (in  yards  along  footrope  of  nets)  of  a 

vessel  of  size  class  h  in  area  j  during  interval  t. 

X..  =  ^,^\    n,  .  fS,  .^/S  .^)X,  .^ 
jt    h=l  hjt^  hjt   rjt^  Tijt 

=  Effort  in  standardized  "days  fished"  in  area  j  during 

interval  t  when  vessel  size  class  r  is  chosen  as  the 

"standard"  class. 

V,    =  Cost  (variable)  of  a  day  fishing  by  a  marginal  vessel  of 
bjt 

size  class  h  in  area  j  during  time  period  t. 

W,   =  Per  time  period  value  of  sunk  capital  plus  interest  on 
ht 

this  sum  at  a  competitive  rate  prorated  over  the  expected 
life  of  the  sunk  capital. 

%t  =  \jt-\jt\jt- V 

=  Net  revenue  of  a  vessel  of  size  class  h  in  area  j  during 
period  t. 
The  relationships  of  interest  are  those  leading  to  Di  -^  and  the  rela- 
tionships relating  effort  and  profitability.   The  number  of  shrimp  of 
species  i  and  age  t  -  k  caught  by  a  vessel  of  size  class  h  during  period 
t  is  given  by: 


(3  5)    C      =  Vl^\it/^jt>^jt  ^ 
^^^    'hijkt      F..^^+M..^^     iJkt-1 


-(F.  .,   +  M.  .,  ) 
^  _  ^   ^   ijkt    ijkt' 


From  (3.5)  total  catch,  weight  of  catch,  gross  revenue,  and  net  revenue 
per  vessel  may  be  calculated  from  their  definitions. 

Firms  owning  vessels  in  the  Gulf  shrimp  fleet  must  decide  in  which 
area  their  vessels  will  fish  and  how  intensely  they  should  fish.   The 


65 

cost  structure  of  vessels  in  each  size  class  will  depend,  in  addition  to 

size  characteristics,  on  the  area  of  hem?  port  and  the  port  area  of 

current  operation.   Vessels  fishing  an  area  out  of  a  temporary  port  may 

have  higher  cos uf.  than  vessels  fishing  the  same  area  who  are  permanently 

based  in  a  port  in  that  area.   Similarly,  vessels  of  the  same  size  class 

fishing  the  same  area  but  from  ports  at  different  distances  from  the 

fishing  ground  will  have  different  costs  due  to  differences  5.n  steaming 

time  to  and  from  the  grounds.   Thus,  the  cost  of  a  unit  of  effort  of  a 

marginal  vessel  in  an  area  v;ill  appear  as  a  step  function  vjhen  plotted 

against  the  number  of  vessels  fishing  in  the  area.   This  cost  will  take 

on  one  value  when  a  marginal  vessel  has  its  home  port  in  the  area  and  a 

higher  value  when  the  marginal  vessel  has  a  home  port  in  some  other  area. 

It  is  probably  reasonable  to  assume  that  migration  patterns  are  such 

that  the  cost  of  fishing  an  area  other  than  the  home  port  area  from  the 

home  port  area  is  greater  than  or  equal  to  the  cost  of  fishing  out  of  a 

temporary  port  in  that  area.   Thus,  vessels  fishing  an  area  other  than 

their  own  may  be  considered  to  be  fishing  out  of  a  temporary  port  in 

that  area  so  that  there  will  be  only  two  values  for  V    for  a  given 

vessel  size  class  in  a  given  area  during  a  given  time  interval.   Since 

vessels  of  a  given  size  class  have  identical  revenue  functions  but 

different  cost  functions  depending  on  home  port  area,  all  vessels  of  a 

given  size  class  based  in  an  area  will  be  fishing  in  that  area  before 

other  vessels  of  the  same  size  class  migrate  to  the  area.   Thus,  the 

cost,  by  size  class,  of  a  unit  of  effort  by  a  marginal  vessel  in  an  area 

will  depend  on  the  relationship  betv/een  number  of  vessels  fishing  the 

area  and  number  of  vessels  based  in  the  area.   Specifically: 

(3.6)  V,  .^   =  v.,  .^    if  n.  _   <  n 

hjt  Ihjt  hjt  —     Ihjt 

V  =V  >V  ifn.         >n 

\jt  2hjt  Ihjt  ^jt  Ihjt 


66 
Net  revenue  by  vessel  size  class  may  be  calculii'red  for  each  area 
once  number  of  vessels  and  effort  are  determined.   Entry  into  the  fleet 
by  new  vessels  is  baaed  on  the  profitability  over  a  number  (t  )  of  pre- 
vious time  periods  by  vessels  of  the  size  class  and  area  in  question. 
Entry  and  exit  are  probably  asymmetrical  so  that  nev;  vessels  begin  to  be 
attracted  only  after  cumulative  net  revenue  reaches  some  positive  level 
(say  D-,,  .)  but  vessels  may  not  begin  to  exit  until  cu:nulative  net  reve- 
nue is  lower  or  even  negative  (say  D   .).   Over  the  range  between  these 
two  values,  vessels  neither  enter  nor  leave  the  fishery.   That  is: 

(3-^)    "2hjt  =  ^71hj  \l~t\   %T'  \ll\   %T  ^  ^Ihj 
"2hjt  =  ^72hj  ^T=t-t^  %T'    \l~t\   %T  ^   ^hj 

"2h3t  =  °   '   ^.hj  <  ^'^-t^  Via-  '   °lh3 

Movements  of  vessels  between  areas  from  one  time  period  to  the  next 
will  occur  by  moving  vessels  to  the  area  with  highest  net  revenue  in  the 
previous  time  period  from  all  other  areas.   In  the  event  that  the  area 
with  highest  net  return  has  fewer  vessels  fishing  in  it  than  have  their 
home  port  there,  so  that  the  lower  cost  coefficient  (V-,,  .  )  is  in  effect, 
the  number  of  vessels  required  to  bring  the  higher  cost  coefficient 
(V„,   )  into  effect  will  be  moved  to  that  area  on  a  prorated  basis  from 
the  other  areas.   In  terms  of  behavioral  relations: 

7 


(3.8) 


^jt  =  "hjt-1  -^  ^r=l   ^8hrj    %t-l  -   °hrt-l^   %rt-l  +  "2hjt 


where  D,  .      ,    =  Max  D,     ^    , 
hit-l  hst-1 

■^  s 


and  n,  _    ^    >  n.,  .^    , 
Tijt-1  —     lhjt-1 


67 
and: 

(3.9)  n^^^  =  n^.^^_^   -  3g,,^^..  (D^^^  ,__^  -  D^.^^^_^)  n^^^^_^  +  n^^^^^ 

r=l,  ...,j-l,  j  +],...,  7 

except  that,  if  rL      <  n,,     ,  the  fo]lov7ing  reallocation  is  pcr- 
113 1-1    injt-1  °  ^ 

formed. 

(3.10)  n,  _  =  n,,  .   ,  +  n„.  .^ 

hjt    lhjt-1    2nj  t 


and: 
(3.11) 


Vt  =  Vt-1  -  f^Shri  ^^hit  -  \rt^  Vt-l^ 


8hr j    hj  ■ 

^s=l  ^8hsj  %3t   -   \st^  '''hst-l^  ^"lhjt-1  -  \jt-l^  ^   ^2hrt 

r=^l,  ...,j-l,  j  +  1,  ...,7 

Equations  (3.8)  and  (3.9)  indicate  that  new  vessels  begin  to  fish, 
or  retiring  vessels  leave  the  fishery,  in  their  home  port  area.   These 
propositions  are  not  unreasonable  since  new  vessejs  V7ill  probably  make 
some  test  runs  near  their  home  port  until  the  vcGccl  is  deened  seav7orthy. 
If  the  time  interval  used  is  short  these  test  runs  will  probably  require 
most  of  one  time  period  to  complete.   Likevjise,  vessels  retiring  from 
the  fleet  will  most  likely  be  found  fishing  in  their  home  port  area 
since  cost  conditions  are  most  favorable  there. 

Once  vessels  are  located  on  a  particular  ground,  they  must  decide 
how  intensely  to  fish,  that  is,  hov;  many  days  fishing  time  per  time 
interval  to  expend.   Variability  in  fishing  days  per  time  interval  is 
probably  not  large  since,  if  it  is  profitable  to  initiate  a  trip  at  all, 
it  pays  to  fish  as  intensely  as  possible  while  on  the  trip.   However,  to 
the  extent  that  profitability  affects  the  attitude  of  the  crew  about 
length  of  trip  and  layover  time  between  trips,  effort  may  vary.   In 
addition,  number  of  trips  per  time  period  may  be  varied  for  a  particular 
vessel  by  postponing  equipment  maintenance  and  thus  reducing  layover  time 


60 
in  port.   However,  maintenance  may  be  postponed  only  for  a  finite  ariount 
of  time  so  that  for  the  avertige  vessel  in  the  area,  this  is  probably  an 
ineffective  method  of  varying  effort.   Expected  returns  below  the  level 
at  which  average  variable  cost  is  covered  will  preclude  fishing  alto- 
gether.  However,  data  are  obtained  on  ex  post  results,  not  a  priori 
expectations,  so  that  a  formulation  indicating  cessation  of  fishing 
activity  is  probably  not  reasonable  unless  expectations  can  be  discovered 
and  are  homogeneous  throughout  the  vessel  size  class  in  the  area.   The 
most  reasonable  proposition  is  that  effort  in  days  fished  per  time  period 
varies  between  minimum  and  maximum  levels  as  a  linear  function  of  net 
revenue  in  the  preceding  time  period. 
(3.12)   X^j,=X^^.^    ,   D^.,_,iD^^. 

\jt  =  ^(12)1  %t-l    '   °lhj  -  %t-l  -  ^2hj 

\jt  "  "2hjt   '   ^2hj  -\jt-l 
Given  the  behavior  described  by  equations  (3.5)  -  (3.12),  various  totals 

of  interest  may  be  calculated  by  taking  the  proper  sums.   For  example: 

H     3     7     t 
Weight  of  total  catch  in  period  t  =  E^  ^  E .  ^  E .  ^  E,    ^   Y,  ...^ 
"  ^  h=l   1=1  j=l  k=t-t   hijkt 

or: 

Total  standardized  effort  in  period  t  =  E.  ,  X. 

J=l  Jt 

By  combining  over  vessel  size  classes,  species,  and  areas,  catches  of 

shrimp  of  the  opposite  sex  and  different  age  that  are  of  the  same  size, 

total  weight  of  shrimp  of  a  given  size  count  may  be  obtained.   Totals 

such  as  these  are  necessary  input  to  the  model  of  the  shrimp  resource 

as  well  as  the  model  of  the  marketing  and  demand  sector. 


A  Kodelof  the-  Marke-ting__3nj_U&maml  Sector 
"o£~t"he  Gu"lf~Shr3.inp_ Industry 

Rather  than  attempt  to  build  an  original  model  of  the  marketing 
and  demand  sector  of  the  Gulf  shrimp  industry,  the  approach  follovied 
here  is  to  take  advantage  of  the  work  of  John  Doll  entitled,  _Ari_ 
Econometric  Analysis  of  the  U.  S.  Shrimp  Market ,  [16].  Doll's  quar- 
terly model  [16,  Chapter  IV]  is  presented  below  with  modification  in 
symbols.  In  addition,  a  relation  is  presented  to  convert  the  single 
ex-vessel  price  appearing  in  his  model  into  a  range  of  prices  for  each 
size  class  of  shrimp. 

The  model  is  simultaneous,  involving  four  jointly  determined  (endo- 
geneous)  variables  and  nine  predetermined  variables.   The  jointly 
determined  variables  are  [16,  p.  65]: 

A  =  Total  consumption,  per  quarter  (t  represents  one  quarter  here 
and  does  not  necessarily  correspond  to  the  time  period  of  the 
basic  resource  or  harvesting  sector  models)  in  millions  of 
pounds,  heads-off  weight. 

B  =  Stocks  held  in  cold  storage  at  the  end  of  the  quarter,  in 
t 

millions  of  pounds,  heads-off  weight. 
D  =  Wholesale  price,  frozen  processed,  26-30  count,  Chicago,  BLS 

(Bureau  of  Labor  Statistics). 
E  =  Ex-vessel  price,  weighted  average  for  South  Atlantic  and 

Gulf  states. 
The  predetermined  variables  are  [16,  pp.  65-66]: 

Y  =  Landings  per  quarter  in  the  South  Atlantic  and  Gulf  states 

in  millions  of  pounds,  heads-off  weight. 
I  =  Imports  per  quarter,  in  millions  of  pounds,  heads-off 
weight. 


70 
E  ^^  =  Ex-vp.ssel  price  lai^ged  one  quarter. 

B  ^^  =  Stocks  held  in  cold  storage  at  the  beginning  of  the 
quarter. 
G  =  Quarterly  total  disposable  income. 

Qo  >  Q-ij  Qa  ~  Quarterly  intercept  dummies  for  quarters  twoj  three,  and 
four,  respectively. 
1  =  The  intercept  dummy. 
The  structural  quarterly  model  for  v^^hich  Doll  estimated  parameters 
is  composed  of  four  equations. 

Wholesale  demand 
(3.13)   A^  =  3(^3)^  +  6(,3)2  ^2  +  ^13)3  ^3  "^  ^13)4  % 

■*■  ^13)5  ^t  -^  ^13)6  ^ 
Price  linkage 
(3.1A)    D^  =  B(,,),  +  E.f^  B(i,).  Q.    +  B^,)3  E^_^ 

"^  ^(14)6  ^t  +  ^14)7  \ 
Ex-vessel  demand 

^''^'^        h   =  ^15)1  -^  htl   ^15)i  '^i  ■"   ^15)5  \  ^   ^15)6  ^t 

+  ^15)7  ^t  ■*■  ^15)8  Vl  +  ^15)9  \ 
Stock  balance 
(3.16)    B^  =  3(,,),  +  3(,,)2  ^t  +  ^16)3  ^t 

"■   ^(16)4  Vl  +  ^(16)5  \ 
The  difference  in  length  of  time  interval  between  Doll's  model  and 
the  time  interval  used  in  the  rest  of  the  model  presented  here  raises 
the  difficulty  of  obtaining  quarterly  landings  with  a  model  that  requires 
prices  for  all  time  periods  within  the  quarter  except  the  last.   This 


71 
difficulty  may  be  partly  overcome  by  using  tht;  prices  determined  in  one 
quarter  for  all  time  periods  occurring  during  the  subsequent  quarter. 
For  example,  if  the  shrimp  and  fleet  models  employ  monthly  time  periods, 
then  the  prices  determined  at  the  end  of  the  preceding  quarter  could  be 
used  in  each  month  during  the  current  quarter  to  generate  catch.   At  the 
end  of  the  current  quarter,  monthly  catches  may  be  totaled  and  used  to 
generate  a  set  of  prices  which  are  used  for  each  month  in  the  subsequent 
quarter.   Thus,  prices  are  constant  for  the  entire  quarter.   However,  if 
the  number  of  tim.e  periods  per  quarter  is  not  large,  this  procedure  nay 
give  reasonable  results.   An  alternative  is  to  use  a  month  corresponding 
to  the  moving  average  of  prices  obtained  in  a  hypothetical  quarter 
employing  data  from  current,  previous,  and  subsequent  months  in  the 
preceding  few  years.   Wiile  this  would  allow  shorter  lags  in  the  har- 
vesting sector  and  thus  more  immediate  seasonal  responses,  it  builds 
into  the  model  an  incapacity  to  react  to  extremely  volatile  conditions 
resulting  from  large  inter-year  price  variation.   A  third  alternative 
is  to  use  quarterly  data  in  the  models  of  the  harvesting  sector  and 
basic  shrimp  resource.   This  alternative  may  prove  reasonable  also. 
Choice  of  an  alternative  must  rest  upon  empirical  considerations. 

The  problem  of  disaggregating  the  ex-vessel  price  into  prices  for 
each  size  class  of  shrimp  is  serious  but  a  workable  solution  can  be 
more  readily  proposed  than  for  the  time  period  problem.   The  price  of  a 
given  size  class  of  shrimp  most  likely  depends  on  the  relative  abundance 
of  the  various-sized  shrimp  available  in  the  market.   Although  imports 
and  cold  storage  holdings  influence  the  size  composition  of  available 
shrimp,  the  relationship  postulated  here  is  between  current  landings 
and  price.   The  price  of  a  given  size  class  of  shrimp  is  postulated  to 


72 
be  a  direct  function  of  the  aggregate  price  detenniTicci  by  equation 
(3.15)  and  an  inverse  function  of  the  proportion  of  that  size  shrimp 
in  total  landings.   That  is: 

(^•1^)    ^jnt  =  ^j  =  2  P(17)3  Qj  +  ^17)8n  ^ 

/\    ^o  \ 

"*"  ^(17)9  I  y"T  ~  Y~  J^t 
\  nt    no  y 

where  the  Q.,  j  -  2,    ...,  7  are  dummies  for  areas  II  -  VII;  i.e.,    the 

equation  is  normalized  on  Area  I ,  Y  .,  is  landings  of  shrimp  of  size  n 

(n  =  1,  ...,  N  different  sizes)  in  time  period  t,  Y   is  landings  in  time 

period  t,  P   is  the  ex-vessel  price  derived  from  the  quarterly  ex-vessel 

price  determined  in  (3.15),  Y   and  Y   are  landings  in  some  base  period, 

and  the  B/-,-,xo   are  coefficients  derived  from  the  price  spread  between 
(17) on 

size  classes  in  the  base  period. 

Equations  (3.1)  -  (3.17)  arc  the  relations  needed  to  describe  the 
dynamic  workings  of  the  Gulf  of  Mexico  shrimp  industry  with  the  excep- 
tion noted  in  the  model  of  the  marketing  and  demand  sector.   In  addition, 
modifications  in  the  variables  of  the  model  of  this  sector  to  make  them 
correspond  more  closely  to  conditions  in  the  Gulf  shrimp  industry  may 
be  needed.   Further  refinement  will  be  dictated  by  the  estimation  tech- 
niques and  programming  procedures  involved  in  the  application  of  a 
simulation  model. 


CHAPTER  IV 


METHODOLOGY  AlU)   DATA 


The  objectives  of  this  study,  listed  In  Chapter  I,  nay  be  presented 
as  a  set  of  objectives  relating  to  the  behavior  of  individual  firms  and 
a  set  of  objectives  relating  to  industry  behavior.   The  objectives 
relating  to  firms  concern  the  description  of  the  behavior  of  firms  in 
the  Gulf  of  Mexico  shrimp  industry  in  response  to  changes  in  the  shrimp 
population,  the  technological  conditions  of  harvesting  and  processing, 
and  demand  conditions.   The  objectives  relating  to  the  industry  concern 
the  behavior  of  the  industry  in  th.e  aggregate  and  particularly  its 
response  to  management  strategies.   The  management  strategies  or  poli- 
cies to  be  considered  are:   (1)  varying  age  of  shrimp  at  first  capture; 
(2)  imposing  an  annual  entry  fee  (license  fee)  on  vessels  in  the 
industry;  and  (3)  imposing  a  landings  fee  or  tax  per  pound  on  shrimp 
landed  by  vessels  in  the  industry. 

The  procedure  for  attaining  the  objectives  relating  to  industry 
behavior  involved  constructing  a  simulation  model  of  the  Gulf  of  Mexico 
shrimp  industry  that  simulates  the  behavior  of  the  industry  under  vari- 
ous conditions.   The  objectives  relating  to  firm  behavior  were  realized 
by  drawing  on  published  results  of  research  into  various  phases  of  the 
industry  and,  where  such  results  were  not  available,  by  resorting  to 
synthesis  of  needed  parameters.   The  major  thrust  of  this  study  is  to 
develop  a  bioeconomic  theory  of  a  fishery,  to  build  an  abstract  model 
of  the  Gulf  of  Mexico  shrimp  industry  based  on  this  theory,  and  to 

73 


74 
develop  an  empirical  model  that  gives  plausible  results.   Ther.?  was  v.o 
attempt  to  elaborate  upon  the  objectives  relating  to  indivxdurtl  firm 
behavior  as  the  emphasis  ol"  this  study  is  to  deteiTnine  the  effects  on 
the  industry  of  selected  regulatory  strategies.   This  chapter  describes 
simulation  as  a  tool  for  policy  evaluation,  the  available  data,  and 
the  computer  r.odel  employed  in  this  simulation  study. 

Si mujL a ti on  as  a  Tool  _f  or_ Model 
Euildi ng  and  Policy  Evaluation 

The  dog  trots  freely  in  the  street 

and  sees  reality 

and  the  things  he  sees 

are  bigger  than  himself 

and  the  things  he  sees 

are  his  reality 

["Dog,"  from  Lawrence  Ferlinghetti ,  A  Coney  Island 
of  the  Mind ,  Copyright  1958  by  Lawrence 
Ferlinghetti,  reprinted  by  permission  of  New 
Directions  Publishing  Corporation.] 

In  order  to  describe  simulation  as  a  tool  for  evaluating  manage- 
ment strategies,  one  must  first  define  simulation.   Simulation  is  not 
a  well-defined  technique  in  the  sense  that  linear  programming  or  regres- 
sion analysis  are  well-defined  techniques.   As  is  the  case  in  most 
descriptions  of  simulation,  several  definitions  are  given  and  then  a 
comprehensive  definition  is  made  for  the  purpose  of  this  study. 

Describing  simulation  as  a  research  method,  Fred  H.  Tyner  [31, 
p.  13]  says:   "Simulation  Involves  the  application  of  logical  reasoning 
to  a  scale  model  of  selected  real-world  phenomena,  whether  the  scale 
model  be  one  of  equations  or  the  prototype  of  a  physical  plant."   In  a 
paper  discussing  the  reasons  for  using  simulation  J.  E.  Creameans  [13, 
p.  6]  writes:   "The  best  that  one  can  say  about  any  simulation  model  is 
that  it  describes  the  object  process  using  those  characteristics  which 
are  important  to  the  results  that  the  model  builder  wishes  to  study." 


75 

G.  H.  Orcutt  [25,  p.  893]  furnishes  an  open-ended  definition  of  siranla- 

tion:   "Simulation  is  a  general  approacli  to  the  study  and  Lise  of  models," 

Defining  simuDation  for  the  purposes  of  a  paper,  Boutwell  and  McMinimy  [8, 

p.  1]  say:   "A  matheiTiatical  simulation  model  is  defined  as  a  model  that 

traces  a  series  of  events  through  time  and/or  space  in  sucli  a  manner 

that  the  cost  and  benefit  streams  of  the  resulting  time  path  are 

measured,"  In  a  Rand  Corporation  publication,  M.  A.  Geisler  [18,  p.  1] 

gives  a  hint  as  to  the  birthplace  of  the  term  simulation: 

The  study  of  large  and  complex  systems  in  recent  years, 
combined  with  the  development  of  large-scale  computers, 
has  led  to  the  representation  of  these  systems  in  mathe- 
matical form  for  programming  and  calculation  on  high-speed 
computers.   Calculations  so  obtained  have  been  essentially 
pseudo-observations  of  these  systems,  which  accounts  to 
some  extent  for  applying  the  term  simulation  to  this 
technique. 

Jay  W.  Forrester  [17,  p.  I'^i]  j  while  dealing  with  industrial  dynamics 

(which  may  be  thought  of  as  a  specific  type  of  simulation  technique) , 

states: 

The  first  and  most  important  foundation  for  industrial 
dynamics  is  the  concept  of  servo-mechanisms  (or 
information-feedback  systems)  as  evolved  during  and 
after  World  War  II. 

An  information-feedback  system  exists  whenever  the 
environment  leads  to  a  decision  that  results  in  action 
which  affects  the  environment  and  thereby  influences 
future  decisions. 

As  can  be  seen  from  the  above  definitions,  there  is  no  general  accord 

in  defining  simulation.   However,  there  are  commonalities  in  nearly  all 

definitions  of  simulation. 

Most  of  the  definitions  indicate  that  systems  with  interacting 

components  are  involved  and  that  the  systems  are  dynamic  as  opposed  to 

static.   Simulation  is  defined,  for  the  purposes  of  this  study,  to  be 

a  technique  for  studying  the  performance  of  dynamic  systems  whose 


76 
components  intei"act  to  form  an  environmental  sett-lng  vjhich  may  change 
as  a  result  of  component  interaction  tlirougli  timt-.   A  simulation  model 
is  an  abstract  representation  of  the  system  to  be  studii^d.   It  is 
usually,  but  not  necessarily,  formulated  ii"i  terms  such  that  a  coraputer 
may  be  used  to  trace  out  the  interaction  of  the  mode]  components  over 
time.   The  model  components  correspond  more  or  less  closely  to  their 
real  system  counterparts  in  a  degree  that  serves  best  the  purposes  for 
which  the  study  is  being  conducted.   Further,  as  implied  above,  a  system 
refers  to  a  set  of  real-world  components  whose  decisions  in  reaction  to 
their  environment  either  wholly  or  in  large  part  determine  their  future 
environment.   Simulation  involves  building  a  model  of  this  real-world 
system  and  operating  the  model  over  time,  observing  its  behavior  which 
supposedly  reflects  that  of  the  real  system. 

At  this  point,  legitimate  questions  arise.   It  is  very  well  to  be 
able  to  represent  a  system  symbolically  and  even  to  have  a  machine 
manipulate  these  symbols  to  simulate  the  system's  behavior,  but  what  is 
to  be  gained  from  this?   Cannot  the  real  system  be  observed  as  easily 
as  its  machine-bound  counterpart?   To  answer  these  questions  is  to 
specify  the  value  of  simulation  as  a  research  tool.   If  a  system  is 
relatively  simple  and  well-understood  and  its  behavior  predictable 
without  error,  then  there  is  no  point  in  simulating  the  system  since 
nothing  is  to  be  gained  from  such  a  simulation.   However,  many  systems 
are  not  well-understood  and/or  their  behavior  not  readily  predicted. 
It  is  in  studying  these  systems  that  simulation  is  of  use. 

In  many  large  and  dynamic  systems,  the  components  of  the  system 
and  the  ways  in  which  these  components  interact  may  not  be  readily 
identifiable.   Building  a  simulation  model  of  the  system  forces  the 
researcher  to  (1)  identify  the  various  components  of  the  system, 


77 
(2)  specify  how  they  interact,  and  (3)  decide  the  relative  importance 
of  components  and  interactions  to  the  behavior  of  the  systeE.   The  test 
of  the  researcher's  skill  is  the  degree  to  which  selected  m.odel  results 
approximate  the  behavior  of  the  system.   (VJhile  it  is  possible  that  the 
model  may  behave  correctly  for  the  v.'rong  reasons,  this  chance  must  be 
taken  in  lieu  of  a  better  validation.)   The  researcher  may  use  all  the 
conventional  econometric  analysis  at  his  coraniand  to  identify  the  rela- 
tionships betv7een  the  components  and  the  components  themselves.   Then, 
by  fitting  these  relationships  into  a  simulation  framework,  the 
researcher  m.ay  discover  important  areas  of  omission  or  misspecif ication. 
Thus,  a  value  of  the  simulation  technique  is  that  it  provides  insight 
into  the  components  and  interactions  of  a  system,  i.e.,  how  the  system 
actually  v/orks . 

Given  that  a  system  may  be  readily  identified  and  that  an  accurate 
model  may  be  devised,  often  the  complexity  of  the  system  prevents  accu- 
rate prediction  of  future  behavior,  especially  if  some  component  or 
relation  of  the  system  is  changed.   Using  a  simulation  model,  the 
system's  behavior  may  be  traced  out  through  time  under  different  sets 
of  conditions  (different  levels  or  states  of  the  policy  variables). 
That  is,  if  an  accurate  model  of  the  system  can  be  devised,  then  it 
will  be  possible  to  experiment  on  the  model,  gaining  valuable  (and  often 
less  costly)  information  about  the  probable  effect  of  proposed  manage- 
ment strategies  on  the  system  itself.   Thus,  a  second  value  of  simulation 
and  the  one  of  primary  interest  in  this  study  is  that  it  gives  the 
researcher  and  his  decision-making  clientele  an  opportunity  to  test  new 
management  strategies  on  a  realistic  model  without  fear  of  a  possibly 
disastrous  result  that  could  occur  from  testing  on  the  system  itself. 


78 

Thus,  simulation  is  a  research  teclmiqiKi  that  has  the.  noteiit  i  al  to 
provide  valuable  information  about  the  system  being  naodeled  and  pof:sible 
effects  of  proposed  policies  affecting  the  system.   A  drawback  to 
employing  simulction  as  a  research  technique  is  that  there  currently 
exists  no  standardized  method  for  evaluating,  the  reliability  of  the 
information  provided  by  a  simulation  model.   Lack  of  a  standardized 
validation  technique  for  simulation  models  may  be  partly  due  to  the 
youth  (relative  to  standard  econometric  methods)  of  simulation  as  a 
research  technique.   In  addition,  simulation  models  tend  to  be  unique, 
problem-oriented  models  that  m.ay  not  lend  themselves  v.-ell  to  standard- 
ized validation  techniques.   However,  simulation  has  been  defined  for 
this  study  in  a  rather  general  sense  and  an  attempt  is  made  here  to 
develop  a  general  approach  to  the  problem  of  model  validation. 

For  purposes  of  exposition,  a  situation  is  assumed  involving  an 
analyst  employed  by  a  client  to  provide  information  about  the  possible 
effects  of  proposed  policies  on  selected  indicators  of  the  performance 
of  some  system.    To  provide  this  information,  the  analyst  employs 


The  terms  "analyst"  and  "client"  are  used  for  convenience'  sake. 
The  "analyst"  may  actually  be  a  group  of  investigators  which  may  include 
all  or  a  part  of  a  group  of  individuals  represented  here  by  the  term 
"client."  The  situation  assumed  here  presupposes  a  "client"  who  recog- 
nizes a  problem  in  a  system  for  which  he  has  authority  to  implement 
policies  designed  to  correct  that  problem.   In  addition,  the  client  is 
assumed  to  possess  an  array  of  alternative  policies  among  which  he  will 
choose  on  the  basis  of  information  provided  by  the  analyst.   This  is  an 
idealistic  situation.   More  likely,  the  "client"  is  likely  to  have  con- 
fused and/or  conflicting  views  about  the  problem  and  policies  designed 
to  correct  it.   In  addition,  as  is  the  case  in  the  present  study,  there 
may  not  exist  a  "client"  with  the  ability  to  implement  policies  even 
after  problems  have  been  identified  and  corrective  policies  proposed. 
Alternatively,  the  analyst  may  not  be  able  to  conceive  of  or  comprehend 
the  system  and/or  the  problems  involved  in  a  manner  that  leads  to  the 
generation  of  meaningful  information.   These  problems  are  not  unique 
to  studies  employing  simulation  as  a  research  technique  and  represent 
needless  complication  to  the  framework  to  be  developed  here. 


79 

simulation  modeling  as  his  prii-nary  resedrcb  technique.   Figure  4.1 
presents  a  flow  diarriram  of  a  possible  frainevork  in  which  tlie  sinulation 
model,  as  initially  constructed  by  the  analyst,  may  be  subjected  to 
progressively  liio-re  rigorous  validation  procedures.   The  model  is  refined 
by  the  analyst  as  a  result  cf  the  validation  procedures  and  as  a  result 
of  the  assessment  by  the  client  and  the  analyst  as  to  the  usefulness  of 
the  information  generated  by  the  model.   As  the  model  becomes  more 
refined  and  capable  of  providing  information  v.'orthy  of  r.iore  confidence, 
so  do  the  validation  procedures  become  more  sophisticated  and  capable 
of  detecting  less  obvious  aberrations  in  model  performance. 

As  represented  in  Figure  4.1,  the  validation  process  begins  after 
initial  construction  of  a  model  by  the  analyst.   During  the  process  of 

model  construction  the  analyst  may  gain  insights  into  the  system  that 

2 
prove  to  be  valuable  information  to  his  client.    The  analyst  and  his 

client  can  evaluate  this  information  in  terms  of  its  implications  for 
model  revision.   In  addition,  the  analyst  may  select  model  output  quan- 
tities that  he  believes  to  be  reliable  indicators  of  system  performance 
and  compare  the  means,  ranges,  and  standard  deviations  over  the  simula- 
tion period  of  these  quantities  with  the  means,  ranges,  and  standard 
deviations  of  their  real-world  counterparts  over  some  base  period. 
Since  the  model  parameters  are  usually  estimated  with  data  generated  by 
the  actual  system  for  a  period  in  which  the  system  exhibited  enough 
stability  to  survive,  the  model  will  likely  prove  stable  if  it  is 
properly  specified.   Model  stability  is  not  a  goal  within  itself, 
however.   There  may  be  inherent  instabilities  in  the  system  that  are 


2 

These  insights  may  be  the  most  valuable  product  of  the  entxre 

research  effort. 


80 


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82 
isolated  as  a  result  of  model  construction  or  that  the  model  must  cap- 
ture in  order  to  provide  information  on  policies  designed  to  eliminate 
the  instabilities.   The  comparisons  involved  in  Phase  I  of  the  valida- 
tion process  are  not  of  the  t3'pe  that  lend  credibility  to  irformation 
provided  by  the  model.   They  merely  provide  crude  indicators  of  the 
performance  of  the  model  and,  together  with  the  information  provided  by 
the  interaction  of  analyst  and  client,  provide  input  into  the  process 
of  revising  the  initial  model. 

Phase  II  of  the  validation  process  involves  experimenting  with  the 
model  to  determine  the  type  of  policy  information  the  model  provides. 
This  information,  after  evaluation  by  the  analyst  and  his  client,  may 
indicate  needed  model  revisions.   In  addition,  the  analyst  may  compute 
simple  correlation  coefficients  between  selected  indicators  of  the  per- 
formance of  the  model.   These  coefficients,  together  with  a  graphic 
analysis  of  selected  model  quantities,  serve  to  indicate  relative 
direction  of  serial  movement  between  model  quantities.   The  relative 
movements  of  model  quantities  over  time  can  be  compared  with  expecta- 
tions based  on  theory  as  well  as  the  relative  movements  of  actual 
quantities  over  time.   These  comparisons  together  with  the  information 
provided  by  analyst-client  interaction  provide  the  basis  for  further 
revision  of  the  model  and  comprise  Phase  II  of  the  validation  process. 
The  revised  model  is  used  to  provide  information  to  the  client  which 
the  analyst  and  client  assess  for  implications  for  further  model  revi- 
sion.  In  addition,  values  generated  by  the  model  for  selected  aggregated 
(over  time  or  variable  subsets)  output  quantities  may  be  subjected  to 
spectral  analysis.   The  resultant  time  path  parameters  relating  to  trend 
as  well  as  amplititude,  frequency,  and  phase  angle  of  cycles  may  be 


83 

compared  with  those  resulting  from  spectral  analysis  of  actual  data. 
The  information  thus  provided  by  Phase  III  of  the  validation  process 
may  be  used  to  direct  further  revision  of  the  model.   Phase  IV  of  the 
validation  process  involves  considering  model- generated  values  of  dis- 
aggregated output  quantities  produced  by  the  model  after  its  revision 
at  the  end  of  Phase  III.   These  quantities  may  be  analyzed  by  graphic 
methods  and  calculation  of  simple  correlation  coefficients  as  in  Phase 
II  or  by  spectral  analysis  as  in  Phase  III  or  both.   The  results  of  this 
procedure,  together  with  the  information  obtained  through  analyst-client 
interaction  may  be  used  to  attain  a  fourth  level  of  revision  of  the 
model. 

The  framework  for  model  validation  presented  here  may  be  modified 
or  extended  to  meet  the  needs  of  a  particular  situation.   At  each  phase 
in  the  validation  process  the  client  receives  information  from  the 
model  through  the  analyst.   On  the  completion  of  any  phase  (possibly 
even  before  Phase  I  begins)  the  client  may  decide  he  has  enough  infor- 
mation.  The  analyst  and  his  client  may  choose  to  cease  revising  the 
model  after  any  phase  of  the  validation  process,  considering  any 
increase  in  model  reliability  not  worth  the  cost  of  the  required  model 
revision  and  validation.   The  analyst  may  be  hindered  in  his  validation 
procedures  by  the  absence  of  actual  time  series  data  on  variables  of 
interest  with  which  to  compare  model  results.   Thus,  it  becomes  clear 
that  the  process  of  model  construction,  revision,  validation,  and  use 
remains  as  much  an  art  as  it  is  a  science.   Even  within  the  framework 
presented  here,  the  analyst  must  effectively  allocate  his  resources 
(presumed  to  be  scarce)  between  model  "validation"  and  model  revision 
and  maintain  a  balance  between  the  sophistication  of  his  validation 
procedures  and  the  level  of  development  of  his  model. 


Data 

Models  that  represent  complex  systems  make  stringent  demands  on 
the  data.   In  the  case  of  the  GuJf  of  Mexico  shrimp  industry  data  in  the 
form  of  parameter  estimates  that  can  be  used  directly  in  building  a  model 
of  the  industry  do  not  exist  for  many  of  those  needed.   Those  parameters 
that  could  not  be  adapted  from  published  literature  were  synthesized 
from  available  data  using  basic  sLatistical  techniques.   Estimates  of 
the  parameters  describing  the  behavior  of  the  Gulf  shrimp  resource  were 
derived  from  estimates  made  by  Berry  [7].   The  work  of  John  Doll  [16] 
provided  most  of  the  parameter  estimates  for  the  marketing  and  demand 
sector  of  the  model  were  synthesized  from  primary  data  published  in 
Osterbind  and  Pantier  [27],  Lassiter  [22],  Lyles  [23,  for  the  years 
1965  and  1966],  Osborn  et  al.  [26],  Surdi  and  Whittaker  [30],  and  Arnold  [5] 

A  model  of  the  Gulf  shrimp  resource  requires  an  individual  growth 
equation  and  a  survival  equation  which  incorporates  estimates  of  natural 
mortality  and  mortality  due  to  fishing.   Equations  (4.1)  and  (4.1a), 
derived  from  equations  given  by  Berry  [7,  p.  127]  are  the  growth  (in 
weight)  equations  for  male  and  female  pink  shrimp,  respectively,  on  the 
Dry  Tortugas  grounds  utilizing  a  monthly  time  period.   These  equations 
are  used  in  this  study  to  represent  weight  in  grams  of  individual  shrimp 

of  brown,  white,  and  pink  species  on  all  grounds. 

f/    T^  „  ,   ,   .    ,„  -   r    -.1992(t  +  1.062)1   3.134 

(4.1)    W  (males)  =  42.3   |1  -  e  J 

f,    ,    s        ,,   fr:        1   X    TO  o   F-,    -.2382(t  -  .2633)1   3.115 
(4.1a)   W  (females)  =  73.3   Ll  -  e  J 

The  time  variable,  t,  is  measured  in  months  of  4.33  weeks  each  from  time 

of  hatching  (zero  age  of  shrimp).   By  multiplying  equations  (4.1)  and 

(4.1a)  by  factors  to  convert  to  heads-off  weight,  convert  from  grams  to 


85 

pounds,  and  taking  the  reciprocals  of  the  results,  the  number  of  shrimp 
per  pound  at  a  given  age  may  be  determined.   Factors  to  convert  heads-on 
to  heads-off  weight  are  (as  derived  from  E.  J.  Barry  [6,  p.  XVL])  for 
brown  shrimp,  C,S21;  pink  shrimp,  0.625;  and  white  shrimp,  0.649.   The 
size  classification  of  shrimp  considered  are:   (1)  very  small,  over  55 
tails  per  pound;  (2)  small,  41-65  tails  per  pound;  (3)  medium,  26-40 
tails  per  pound;  and  (4)  large,  25  and  under  tails  per  pound.   Table  4.1 
gives  the  age,  in  months,  of  male  and  female  shrimp  in  the  four  size 
categories.   Shrimp  are  assumed  to  become  subject  to  capture  at  three 
months  of  age.   The  variation  in  heads-on  to  heads-off  weight  conversion 
factors  made  no  difference  between  species  in  these  gross  size 
categories. 

The  survival  equation  used  in  this  study  is  of  the  form  specified 
in  equation  (3.2).   The  natural  mortality  coefficient,  M,  is  not  differ- 
entiated by  species,  time,  or  area  and  the  initial  value  used  was  0.22 
[7,  p.  88].   Fishing  mortality  (F   )  was  related  to  effort  (in  standard- 
ized 24-hour  days  fished  -X.  )  by  area  and  time  as  shown  by  equation 
(4.2). 
(4.2)    F.^  =  b.X.^ 

Initial  estimates  of  the  b.'s  were  derived  for  each  area  from  the  b 

J 

value  given  by  Berry  [7,  p.  88]  of  11  x  10~  by  multiplying  by  1125  and 
dividing  by  the  square  nautical  miles  fished  in  the  area  (as  estimated 
from  maps  presented  in  [26])  to  convert  to  an  equivalent  area  basis  and 
multiplying  by  24  to  convert  to  an  equivalent  time  basis.   The  initial 
estimates  of  the  b.'s  and  the  estimated  area  fished  in  square  nautical 
miles  in  each  area  are  given  in  Table  4.2  for  each  statistical  area. 
Standardized  days  fished  are  derived  from  reported  24-hour  days  fished 


86 


Table  4.1.   Age  (in  inonths  o£  4.33  vje.eks  each)  distribution  by 
size  and  sex  of  brown,  pink,  and  white  shrimp  in 
the  Gulf  of  Mexico 


Size  Category 
(tails/pound) 

1)  over  65 

2)  41  -  65 

3)  26  -  40 

4)  25  and  under 


Males 


3  through 

4  inonths 

5  through 

6  months 

7  through 

9  months 

10  months 
and  over 


Age 


Females 


3  months 


4  months 


5  through 

6  months 

7  months 
and  over 


87 

Table  4.2.   Coefficients  to  convert  2'-';-hour  days  fished  to 
fishing  mortality  and  estimated  square  nautical 
miles  fished  by  area 


Estimated 
square  nautical 
Area  j  b  miles  fished 

'■■■■■         -  .   -  J 

I  1.13  X  10"^  26,185.50 

II  2.26  X  10~^  13,092.75 

III  2.50  X  10"^  11,902.50 

IV  1.19  X  10~^  24,995.25 
V  1.25  X  10"^  23,805.00 

VI  3.12  X  10"^  9,522.00 

VII  0.92  X  10"^  32,136.75 


88 
per  vessel  size  class  by  multiplying  days  fished  by  each  vessel  size 
class  by  the  estimated  sweep  capacity  per  vessel  in  hundreds  of  feet. 
The  vessel  size  classes  used  and  their  sweep  capacity  in  hundreds  of 
feet  are  given  ia  Table  4.3. 

The  computer  model  calculates  number  of  recruits  each  month  by 
adding  to  the  mean  recruits  each  month  the  product  of  a  normally  dis- 
tributed random  number  with  zero  mean  and  variance  of  one  and  the 
standard  deviation  of  recruits  in  that  month.   The  estimated  means  and 
standard  deviations  of  recruits  for  species  in  each  month  in  each  area 
are  presented  in  Appendix  II  in  the  data  required  for  initialization  of 
the  simulation  program.   Appendix  I  presents  the  computer  program  and 
data  required  to  estimate  recruits  by  species  by  month  and  area. 

The  model  of  the  harvesting  sector — the  fleet — of  the  Gulf  of  Mexico 
shrimp  Industry  is  required  to  generate  24-hour  days  fished  by  vessels 
in  each  size  class  in  each  area.   To  do  this,  the  computer  program 
adjusts  average  days  fished  per  month  by  a  vessel  of  a  given  size  class 
in  a  given  area  by  a  factor  depending  on  net  revenue  in  the  preceding 
month.   Adjusted  average  days  fished  per  vessel  is  then  multiplied  by 
the  number  of  vessels  in  that  size  class  fishing  in  the  given  area. 
Adjusted  days  fished  by  vessels  of  all  size  classes  are  then  standardized 
by  multiplying  by  vessel  size  class  sweep  capacity  in  hundreds  of  feet 
and  added  together  to  determine  24-hour  days  fished  in  that  area. 
Table  4.4,  adapted  from  tables  by  Lassiter  [22,  pp.  40-46],  presents 
estimates  of  the  average  24-hour  days  fished  by  a  vessel  in  each  size 
class  in  each  month  of  the  year.   Table  4.5  gives  the  adjustment  fac- 
tors by  which  the  data  in  Table  4.4  are  adjusted  to  arrive  at  average 
24-hour  days  fished  per  month  by  a  vessel  in  each  size  class  in  each 
area  in  each  month  of  the  year.   These  factors  are  based  on  the  ratio 


89 

Table  4.3.   Vessel  size  classes  and  sweep  capacity  of  nets  along 
headropc  in  hundreds  of  feet 


Vessel  size  class Gross  register  tonnage Sweep  capacity 

100  feet 

1  less    than  5  .375 

2  5-19  .500 

3  20-49  ,800 

4  50-79  1.000 

5  80  and  over  1.250 


90 

Table  4.4.   Mean  24-hour  days  fished  per  month  by  a  vessel  in  each 
size  class 


Vessel 

size 

class 

Month 

1^ 

2 

3 

4 

5 

January 

1.0 

2.9 

4.2 

5.4 

4.9 

February 

0.5 

2.7 

3.7 

5.9 

5.0 

March 

0.5 

3.2 

4.6 

6.6 

7.9 

April 

0.5 

2.7 

4.1 

6.5 

5.2 

May 

1.0 

3.2 

4.5 

7.2 

6.8 

June 

1.0 

4.9 

5.4 

6.7 

6.7 

July 

0.75 

5.8 

6.4 

7.4 

7.1 

Augus  t 

1.5 

5.2 

6.5 

7.7 

7.0 

September 

2.5 

4.5 

5.3 

6.9 

7.2 

October 

3.0 

5.5 

6.2 

7.2 

7.3 

November 

3.0 

3.8 

5.0 

6.3 

6.3 

December 

2.0 

2.7 

4.2 

6.5 

6.4 

Estimated  from  closed  seasons  in  1969,  personal  knowledge,  and 
the  distribution  of  white  shrimp  landings  as  given  in  [26]. 


91 


Table  4.5.   Factors  to  adjust  days  fished  by  a  vessel  in  a  size  class 
to  reflect  variations  in  average  days  fished  by  vessels 
in  different  areas 


Area      Adjustn.ent  factor 


I  1.15 

II  .83 

III  -73 

IV  .83 
V  1.13 

VI  1.13 

VII  1.15 


92 
of  the  average  days  f i  shed  per  year  by  vessels  in  an  area  to  the  average 
days  fished  per  year  by  vessels  in  all  areas. 

The  number  of  vessels  estimated  to  have  hone  ports  in  each  area  is 
given  in  Table  4.6,  along  with  the  number  of  vassels  assumed  to  be 
fishing  in  each  area  in  December  of  a  typical  year.   The  latter  figures 
are  needed  to  initialize  the  simulation  model. 

The  model  of  the  marketing  sector  employs  a  quarterly  time  inter- 
val.  Given  catch  for  the  quarter,  this  model  calculates  ex-vessel 
price  as  well  as  consumption,  ending  stocks  in  cold  storage,  and  whole- 
sale price.   The  calculated  ex-vessel  price  is  used  to  determine  the 
ex-vessel  prices  used  in  the  model  of  the  harvesting  sector  for  each 
month  in  the  succeeding  quarter.   The  model  of  the  marketing  sector  is 
based  on  the  quarterly  model  estimated  by  Doll  [16]  and  the  reduced 
form  coefficients  of  Doll's  model  are  presented  in  Table  4.7  for  the 

variables  as  identified  in  Chapter  III.   In  addition,  Doll  [16,  p.  104] 

3 
presents  an  import  equation  that  is  employed  here.    The  equation  is 

given  as  (4.3)  using  the  same  variable  defined  as  in  Chapter  III. 

(4.3)    I^  =  -9.212  -  0.1952Y^_^  -  8.4988Q2 

In  order  to  be  consistent  with  the  model  of  the  harvesting  sector,  the 

ex-vessel  price  computed  with  the  parameters  presented  in  Table  4.7  is 

converted  to  ex-vessel  prices  for  each  size  class  of  shrimp  and  further 


3 

There  is  an  exception.   Doll  [16,  p.  104]  reports  the  coefficient 

of  Q-  in  equation  (4.3)  as  -88.4988.   Use  of  this  value,  holding  Y 

and  G  at  mean  values,  produced  negative  imports  which  did  not  occur  in 
the  data  he  reported  using.   Since  imports  were  nearly  the  same  in  the 
second  and  third  quarters  in  this  data  [16,  pp.  98-99],  the  value  of 
-8.4988  was  used  as  the  coefficient  for  Q^ ,  approximating  the  coeffi- 
cient of  Q_,  and  reflecting  the  assumption  of  an  error  in  the  reported 
coefficient. 


93 

Table  4.6.   Number  of  vessels  in  each  size  class  estimated  to  have 
home  ports  in  each  area  and  number  of  vessels  in  each 
size  class  assumed  to  be  fishing  in  each  area  in 
December  of  a  typical  year 


Vessels  estimated  to  have  home  ports  : 
each  area  by  vessel  size  class 

Ln 

Area 

1 

2 

3 

4 

5 

I 

0 

7 

170 

191 

41 

II 

98 

101 

52 

21 

3 

III 

582 

158 

242 

110 

29 

IV 

3 

,257 

233 

347 

283 

46 

V 

860 

135 

251 

429 

93 

Vessels 
December 

assumed 
of  a  typ 

to  bf 
ical 

2  fishing 
year  by 

;  in  each  area  in 
vessel  size  class 

Area 

1 

2 

3 

4 

5 

I 

0 

7 

170 

291 

61 

II 

98 

101 

52 

21 

3 

III 

582 

158 

242 

110 

14 

IV 

3 

,257 

233 

347 

283 

26 

V 

860 

135 

251 

229 

23 

VI 

0 

0 

0 

100 

10 

VII 

0 

0 

0 

0 

75 

94 


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0) 

3 
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95 

adjusted  to  reflect  variations  in  the  proportion  of  total  catch  that 
each  size  class  represents. 

The  Computer  Program 

The  model  was  reduced  to  a  computer  program  using  the  Fortran  IV 
Level  E  language  designed  for  the  IBM  System/360  [21].   The  program  and 
initialization  data  are  presented  in  Appendix  II.   Figure  4.1  is  a  flow 
chart  of  the  essential  workings  of  the  program,  denoting  input  and  out- 
put of  the  main  program  and  the  subroutines. 


96 


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60 

CHAPTER  V 


RESULTS  OBTAINED  WITH  THE  SIMULATION  MODEL 
AND  POLICY  IMPLICATIONS 


In  order  to  gain  credibility  for  results  from  simulation  under 
various  levels  of  the  policy  variables,  a  simulation  model  must  be 
verified  to  possess  some  desired  degree  of  validity.   This  chapter 
describes  the  phases  of  the  validation  framework  presented  in  Chapter 
IV  that  were  completed  with  the  present  model.   The  policies  considered 
and  the  results  obtained  with  the  simulation  model  for  specified  policy 
levels  are  presented  along  with  a  discussion  of  the  implications  of  the 
policies  for  the  attainment  of  various  objectives. 

Model  Validation 

The  validation  procedures  described  in  Phases  I  and  II  of  the 
framework  for  model  validation  presented  in  Chapter  IV  (see  Figure  4.1) 
were  applied  to  selected  annual  summary  data  generated  by  the  present 
model.   After  the  comparisons  described  in  Phase  I  were  made,  the  model, 
as  originally  constructed,  was  revised  and  a  30-year  period  was  simu- 
lated.  The  model  revision  segment  of  Phase  II  was  not  accomplished. 


Thirty  years  was  an  arbitrarily  chosen  period  that  promised  to  be 
sufficiently  long  to  allow  any  unsuspected  cyclical  behavior  to  be  dis- 
covered and  yet  allow  the  required  computer  storage  space  for  the 
program  to  remain  small  enough  to  qualify  the  program  for  the  lowest 
hourly  rate  for  machine  time  as  determined  by  storage  requirements. 
Actually,  all  cycles  appeared  complete  within  five  years,  the  "length 
of  run"  chosen  for  policy  experimentation. 

97 


98 
In  addition  to  the  comparisons  involving  annual  suiriinary  data,  montlily 
values  generated  by  the  model  for  allocation  of  effort  are  presented  to 
Indicate  how  the  procedures  described  in  Phase  II  for  aggregated  quan- 
tities might  be  applied  to  disaggregated  quantities  during  Phase  IV, 

The  output  data  describing  shrimp  landings,  prices,  and  imports 
were  compared  with  equivalent  summary  data  found  in  Shellfish;   Situa- 
tion and  Outlook;   1970  Annual  Beview  [30]  covering  most  of  the  decade 
of  the  1960's.   The  output  data  concerning  vessel  numbers,  allocation 
of  vessels  among  areas,  fishing  intensity,  and  profitability  were  com- 
pared to  the  figures  presented  in  the  tables  of  Chapters  III  and  IV,  as 
well  as  to  the  data  presented  in  Osterbind  and  Pantier  [27],  Lassiter 
[22],  and  Lyles  [23].   There  was  no  attempt  to  determine  correlation  of 
simulated  output  with  actual  data  through  statistical  techniques. 

Operation  of  the  model  using  initial  parameter  estimates  indicated 
two  areas  where  adjustments  were  needed.   Landings  were  extremely  low, 
indicating  that  either  the  coefficients  used  to  convert  effort  into 
fishing  mortality  (the  b.'s)  were  too  low  or  estimates  of  mean  recruits 
were  too  low,  or  both.   In  order  to  maintain  a  proper  ratio  of  shrimp 
in  each  size  class  of  catch,  both  sets  of  estimates  were  adjusted  upward 
until  catch  levels  approximating  those  actually  occurring  in  the  indus- 
try were  obtained.   Table  5.1  presents  the  b.  estimates  used  in  the 
model  as  well  as  the  factors  by  which  the  initial  estimates  of  the  mean 
number  of  shrimp  recruited  by  month  and  area  were  multiplied.   In  addi- 
tion to  the  adjustments  required  to  produce  landings  similar  to  those 
occurring  in  the  industry,  the  imports  equation  presented  by  Doll  [16, 
p.  lOA]  was  further  adjusted  to  reduce  predicted  imports  to  a  level 
approximating  actual  occurrences.   The  adjustment  made  was  to  change 


99 

Table  5.1.   Adjusted  coefficiants  to  convert  24-hour  days  fished  to 

fishing  mortality  and  factors  (ADFACJ's)  by  xv/hich  initial 
estimates  of  the  mean  number  of  shrimp  recruits  were 
multiplied  for  final  use  in  the  model 


Area  i                          b . 
___! 1. 


AD> 

'kCJ. 

4, 

,00 

4. 

.00 

2, 

,00 

1, 

,75 

1. 

.75 

1, 

.00 

3, 

.00 

I  4.93  X  10~^ 

II  9.85  X  10~^ 

III  7.26  X  10"^ 

IV  3.31  X  10"^ 
V  3.49  X  10~^ 

VI  9.08  X  10"^ 

VII  5.81  X  10~^ 


100 
the  intercept  value  used  from  the  -9.212  presented  in  equation  (4.3)  to 
the  value  -19.212  used  in  the  model  as  presented  in  Appendix  II.   No 
further  adjustments  in  the  model  parameters  were  made  as  a  result  of 
Phase  I  validation  procedures.   Phase  I  comparisons  based  on  output 
from  the  model  as  presented  in  Appendix  II  are  given  below. 

Surdi  and  Whittaker  [30,  p.  7]  report  annual  Gulf  shrimp  landings 
from  1960  to  1970.   During  this  period  landings  varied  from  a  low  of 
79.6  million  pounds  (heads-off  weight)  in  1961  to  a  high  of  145.2 
million  pounds  (heads-off  weight)  in  1970  with  average  annual  landings 
for  the  period  1960-1970  at  119.1  million  pounds.   The  model  listed  in 
Appendix  II,  using  the  initialization  data  listed  there,  generated 
annual  landings  values  ranging  from  a  low  of  93.6  million  pounds  to  a 
high  of  113.9  million  pounds  with  an  annual  average  of  104.4  million 
pounds  and  a  standard  deviation  of  5.0  million  pounds.   Thus,  the  model 
generates  landings  in  the  ranges  of  actual  landings  occurring  during 
the  decade  of  the  1960's;  however,  model  landings  show  more  stability. 
Average  generated  landings  were  below  average  actual  landings  during 
the  1960 's  by  14.7  million  pounds  per  year  for  an  average  percentage 
error  of  12.3  percent  per  year.   This  discrepancy  may  result  from  low 
estimates  of  mortality,  shrimp  recruits,  or  both.   It  may  also  result 
from  the  intra-year  cyclical  patterns  of  shrimp  abundance  by  area  and 
effort  allocation  being  out  of  phase  in  the  model  as  compared  with  the 
real  world  and  may  be  altered  during  later  revision. 

Table  5.2  presents  information  on  the  size  composition  of  actual 
catches  in  the  Gulf  and  South  Atlantic  states  from  1964  through  1970 
and  the  average  composition  of  30  years  of  catches  generated  by  the 
computer  model.   While  the  size  classifications  used  in  the  model 


101 

Table  5.2.   Size  composition  of  actual  shrimp  caiches  in  the  Gu]f  and 
South  Atlantic  states  for  the  years  1964-1970  and  average 
size  composition  of  30  years  catch  data  generated  by  the 
computer  model 


Percent  of  actual  catch 


Year 


Large  Medium  Small 

(30  &  under  tails/lb.)   (31-50  tails/lb.)   (over  50  tails /lb.) 


1964 
1965 
1966 
1967 
1968 
1969 
1970 


39.5 
35.3 
36.8 
37.8 
34.7 
32.9 
36.3 


35.8 
35.9 
31.1 
34.8 
33.3 
31.7 
30.3 


24.7 
28:8 
32.1 
27.4 
32.0 
35.4 
33.4 


Mean 


36.2 


33.3 


30.5 


Standard 
Deviation 


2.15 


2.30 


3.73 


Percent  of  average  catches  generated 
by  the  computer  model 


Large 
(25  &  over 
tails/lb.) 


Medium 

(26-40 

tails/lb.) 


Small 
(41-65 
tails/lb.) 


Very   small 

(over   65 
tails/lb.) 


Mean 


27.9 


29.8 


21.7 


20.6 


Standard 
Deviation 


1.31 


1.71 


1.48 


1.56 


Mean 


Large  Medium  Small 

(30  &  under  tails/lb.)   (31-50  tails/lb.)   (over  50  tails/lb.) 


37.9 


28.5 


33.6 


Calculated  from  catches  generated  by  the  model  on  the  assumption  that 
catches  in  the  medium  (26-40)  and  small  (41-65)  categories  are  uniformly 
distributed  over  the  five  tails/lb.  intervals  making  up  these  classifi- 
cations. 


102 
am  not  the  same  as  those  reported  by  Surdi  and  Wiittaker  [30,  p.  8], 
the  data  in  Table  5.2  indicate  that  the  shrimp  catches  generated  by  the 
computer  model  have  a  similar  si?.e  composition  to  that  of  actual 
catches. 

Surdi  and  Whittaker  [30,  p.  16]  report  ex-vessel  prices  occurring 
for  brown,  white,  and  pink  shrimp  at  Brov^msville-Port  Isabel,  Texas, 
Morgan  City,  Louisiana,  and  Tampa,  Florida,  respectively,  for  each 
month  of  the  years  19G9  and  1970  for  three  sizes  of  shrimp.   There  are 
thus  72  observations  on  prices  for  each  size  of  shrimp.   The  ex-vessel 
price  for  15  -  20  tails  per  pound  count  shrimp  ranged  from  a  low  of 
$1.07  per  pound  to  a  high  of  $1.48  per  pound.   Prices  for  large  shrimp 
generated  by  the  computer  model  fell  within  this  range.   The  ex-vessel 
price  for  shrimp  counting  31  -  35  tails  per  pound  ranged  from  a  low  of 
$0.75  per  pound  to  a  high  of  $1.10  per  pound,  a  range  which  contained 
the  prices  generated  for  medium  shrimp  as  defined  in  the  model.   The 
prices  for  shrimp  counting  51  -  65  tails  per  pound  ranged  from  a  low  of 
$0.41  per  pound  to  a  high  of  $0.77  per  pound.   The  prices  generated  by 
the  model  for  small  shrimp  were  generally  near  the  top  of  this  range 
while  the  prices  for  very  small  shrimp  concentrated  near  the  bottom  of 
the  range.   As  with  landings,  model  prices  showed  somewhat  more  stabil- 
ity than  real-world  prices. 

The  computer  model  generated  average  imports  of  180.3  million 
pounds  (heads-off  weight)  per  year  with  a  standard  deviation  of  0.8 
million  pounds.  About  23  percent  of  the  imports  occurred  in  the  first 
quarter,  about  20  percent  in  each  of  the  next  two  quarters  with  about 
37  percent  of  the  imports  entering  the  country  in  the  last  quarter. 
Thus,  generated  imports  were  slightly  lower  than  the  average  annual 


103 

imports  of  182.1  million  pounds  per  year  reported  by  Surdi  and  Whitr.akor 
[30,  p.  12]  for  the  years  1960-1570. 

The  above  comparisons  of  means  and  standard  deviations  of  model 
quantities  with  actual  data  for  the  1950 's  indicate  that  the  model  as 
presented  in  Appendix  II  did  not  explode;  it  reproduced  values  within 
the  ranges  established  from  actual  data.   The  comparisons  of  Phases  II 
through  IV  of  the  validation  framework  presented  in  Chapter  IV  are 
intended  to  provide  indications  of  the  underlying  economic  relationships 
contained  in  the  model.   Relative  movements  in  selected  model  quantities 
are  presented  below. 

In  the  present  model  total  personal  disposable  income  is  held  con- 
stant, thus  eliminating  shifts  in  demand  due  to  population  and/or 
productivity  effects.   In  addition,  to  the  extent  that  personal  dispos- 
able income  is  correlated  with  time  (as  it  was  in  Doll's  data  [16, 
pp.  29,  97]),  holding  this  variable  constant  removes  any  trend  in 
demand.   Thus,  the  movements  in  values  generated  by  the  model  reflect 
variations  in  shrimp  supply  resulting  from  resource  availability  and 
effort  variability.   Figure  5.1  presents  the  values  generated  over  a 
30-year  time  period  by  the  model  for  average  wholesale  and  ex-vessel 
prices,  total  landings,  imports,  and  effort  in  adjusted  days  fished. 
Figure  5.2  presents  the  values  generated  by  the  model  for  total  produc- 
tion costs,  adjusted  days  fished,  value  of  the  fleet  assuming  a  five- 
year  investment  life,  and  net  return  (ex-vessel  value  of  the  catch  less 
total  production  costs).   Table  5.3  presents  simple  correlation  coeffi- 
cients for  the  variables  presented  in  Figures  5.1  and  5.2  plus  ex-vessel 
value  of  the  catch.   These  comparisons  correspond  to  those  indicated  in 
Phase  II  of  the  validation  framework  described  in  Chapter  IV.   As  indi- 
cated in  Figure  5.1  and  Table  5.3,  wholesale  and  ex-vessel  prices 


104 


185- 
180- 
175- 
170- 
165- 
160- 
155- 
150- 
145- 
140- 
135- 
130- 
125- 
120- 
115- 
110- 
105- 
lOO- 
95' 

90- 
85 


Imports 
(mil.  of 
lb.) 


Adjusted 
Days  Fished 
(2,000  days) 

Wholesale 
Prices 

(cents 
per  lb.) 


T — t—r 
5 


T— I — r— 1 
10 


I  I  I  I  I  I  I  1  I  I  I  rill 
15       20       25     30 


Total 
f  \    /    Landings 
V       (mil.  of 
lb.) 


Ex-vessel 
Prices 

(cents 
per  lb.) 


Figure  5.1.   Annual  Values  Generated  by  the  Computer  Model  for 
Wholesale  and  Ex-vessel  Prices,  Total  Landings, 
Imports,  and  Effort  in  Adjusted  Days  Fished 


105 


255  - 

245  I 

235 
225 
205 
200  -i 
195 
185 
165  _ 
155  - 
135  - 
125 
115  _ 
105- 


Value  of 
the  Fleet 
(nil.  of 
dollars) 


Adjusted 
Days  Fished 
...xN.^^,  (2,000  days) 

Total 
Production 
Costs 
(mil.  of 
dollars) 


■15  _ 
-25- 

-35 
-45-1 


I    I   I    I 

1 


I    I    I    I    I    I    I 

5  10 


I    I    I    I    I    I   I    I    I 

15  20 


rTT 


TT 

25 


TT 


Net 
Return 
(mil.  of 
dollars) 

m 

30  Time  in 
Years 


Figure  5.2. 


Annual  Values  Generated  by  the  Computer  Model  for 
Total  Production  Costs,  Adjusted  Days  Fished,  Value 
of  the  Fleet  Assuming  a  Fixed  Year  Investment  Life 
and  Net  Return  (ex-vessel  value  of  the  catch  less 
total  production  cost). 


106 

Table  5.3.   Simple  correlation  coefficicnLs  between  selected  variables 
based  on  values  generated  by  the  computer  model 

Net         Total       Ex-vessel  value 
return landings of  the  catch 


Total  Production  Costs       -0.923 
Value  of  the  Fleet 


(5-yr.  investment 

life) 

-0.809 

a 

Adjusted  Days  Fished 

-0.950 

0.847 

Wholesale  Price 

a 

-0.093 

Ex-vessel  Price 

a 

-0.380 

Imports 

a 

-0.774 

Net  Return 

1.0 

-0.689 

0.577 


Not  calculated. 


107 
generally  move  in  directjons  opposite  to  that  for  total  landings  con- 
sistent with  the  predictions  of  demand  theory  (increasing  quantities 
supplied  results  in  lower  prices).   The  relationship  betvjeen  landings 
and  prices  was  moderated  somewhat  by  the  negative  correlation  between 
total  landings  and  imports  and  the  dependence,  in  the  model,  of  prices 
on  total  supplies  (landings  plus  imports).   Total  landings  and  adjusted 
days  fished  (effort)  are  positively  correlated.   This  result  is  con- 
sistent with  production  theory  for  stages  I  and  II  of  the  classical 
production  function.   The  data  presented  in  Table  5.3  and  depicted  in 
Figure  5.3  indicate  that  net  return  is  negatively  correlated  with  total 
production  costs,  value  of  investment  in  the  fleet,  and  adjusted  days 
fished.   These  comparisons  indicate  that  effort  and  investment  in  the 
fleet  are  in  excess  of  the  levels  needed  for  maximization  of  net  return. 
The  positive  correlation  between  adjusted  days  fished  and  ex-vessel 
value  of  the  catch  suggests  that  the  point  of  decreasing  total  returns 
to  effort  has  not  been  reached. 

Tables  5.4  and  5.5  present  data  on  the  intra-year  cyclical  alloca- 
tion of  vessels  among  areas  by  the  computer  model.   Comparisons  of  these 
data  with  the  data  presented  by  Lassiter  [22,  p.  34]  correspond  to  the 
types  of  comparisons  outlined  as  part  of  Phase  IV  of  the  validation 
framework  presented  in  Chapter  IV.   Lassiter  [22,  p.  34]  presents  infor- 
mation on  the  percentage  of  total  monthly  activity  spent  in  each  area 
by  a  sample  of  otter  trawl  shrimp  vessels  for  the  years  1959,  1960,  and 
1961.   Since  the  computer  model  allows  vessels  to  fish  in  only  one  area 
per  month,  the  number  of  vessels  fishing  in  an  area  expressed  as  a  per- 
centage of  vessels  fishing  in  all  areas  is  a  measure  of  the  effort  spent 
in  that  area.   Boats  (vessel  size  class  one)  do  not  readily  migrate 
between  areas  in  the  real  world  and  were  not  allowed  to  migrate  in  the 


108 


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109 

Table  5.4.   Conparison  of  percentage  disfrlhution  of  effort  by  area 
in  each  month  of  the  year  of  sample  vessels  with  the 
percentage  allocation  generated  by  the  computer  model 
in  the  30th  year  for  vessels  (vessel  size  classes  2-5) 


Area 

Month^ 

I 

II 

III 

IV 

V 

VI 

VII 

January 

S 
M 

23.5 
9.9 

1.4 
3.9 

4.5 
60.9 

31.5 
4.6 

17.4 
16 . 6 

16.6 
3.7 

4.6 
0.3 

February 

S 

M 

29.9 
38.9 

1.0 
2.6 

2.1 
37.4 

21.5 
4.2 

15.8 
13.0 

15.8 
3.7 

13.9 

0.2 

March 

S 

26.9 

2.3 

1.8 

21.1 

18.7 

14.5 

14.7 

M 

30.5 

2.5 

18.9 

36.3 

8.4 

3.4 

0.2 

April 

S 

25.7 

8.2 

2.9 

24.1 

23.6 

6.8 

13.0 

M 

19.7 

2.4 

8.5 

60.6 

5.7 

3.0 

0.0 

May 

S 

15.0 

6.2 

3.9 

31.5 

28.8 

6.7 

7.4 

M 

15.0 

3.5 

6.6 

64.5 

5.4 

2.8 

2.3 

June 

S 

7.1 

1.5 

27.4 

27.2 

21.0 

8.3 

7.8 

M 

13.2 

6.7 

5.5 

62.0 

5.4 

2.8 

4.4 

July 

S 

2.8 

0.6 

21.0 

22.9 

46.2 

2.8 

3.6 

M 

11.9 

6.7 

4.9 

50.4 

18.5 

2.2 

5.4 

August 

S 

2.6 

0.7 

17.9 

23.8 

50.2 

3.3 

1.2 

M 

9.6 

6.5 

4.3 

28.6 

45.7 

1.1 

4.2 

September 

S 

2.8 

1.0 

14.0 

23.0 

52.7 

4.9 

1.4 

M 

8.8 

5.1 

12.2 

25.0 

44.0 

1.1 

3.9 

October 

S 

5.8 

1.4 

11.0 

25.5 

44.4 

8.5 

3.1 

M 

6.2 

3.0 

54.2 

9.0 

25.5 

1.0 

1.0 

November 

S 

11.7 

1.3 

10.7 

28.3 

35.7 

7.3 

5.3 

M 

5.4 

2.1 

55.1 

7.1 

16.7 

13.3 

0.4 

December 

S 

14.3 

1.7 

8.0 

27.5 

25.8 

11.1 

11.3 

M 

5.9 

3.2 

48.6 

6.6 

12.8 

22.7 

0.2 

^"S"  denotes 

sample 

values 

while  "M" 

denotes 

values 

generated  by 

the  model 

, 

110 

Table  5.5.  Comparison  of  percentage  distribution  of  effort  among 
aggregated  areas  in  each  month  of  sample  vessels  v^7ith 
the  allocation  generated  by  the  model 


Area 


Month' 


I-II-VII 


III-IV 


V-VI 

34.0 
20.3 

31.6 
16.7 

33.2 
11.8 

30.4 
8.7 

35.5 
8.2 

29.3 
8.2 

49.0 
20.7 

53.5 
46.8 

57.6 
45.1 

52.9 
26.5 

43.0 
30.0 

36.9 
35.5 


January 

February 

March 

April 

May 

June 

July 

August 

September 

October 

November 

December 


S 

M 

S 

M 

S 

M 

S 

M 

S 

M 


M 

S 

M 


M 

S 

M 

S 
M 

S 

M 

S 

M 


29.5 
14.1 

44.8 
41.7 

43.9 
33.2 

46.9 
22.1 

28.6 
20.8 

16.4 
24.3 

7.0 
24.0 

3.8 
20.3 

5.2 
17.8 

10.3 
10.2 

18.3 
7.9 

27.3 
9.3 


36.0 
65.5 

23.6 

41.6 

22.9 
55.2 

27.0 
69.1 

35.4 
71.1 

54.6 
67.5 

43.9 
55.3 

41.7 
32.9 

39.0 
37.2 

36.5 
63.2 

39.0 
62.2 

35.5 

55.2 


^"S"  denotes  sample  results  while  "M"  denotes  model  values  gener- 
ated.  Rows  may  not  add  to  100%  due  to  rounding. 


Ill 

model.   Since  boats  presumably  V7cre  not.  presented  in  Lassiter's  figures, 
they  are  not  used  in  calculating  mcntlily  activity  in  the  model  as  shown 
in  Tables  5.4  or  5.5.   Table  5.4  compares  the  three-year  average  per- 
centage of  total  activity  spent  in  each  area  in  each  month  by  the  sairple 
vessels  with  the  percentage  allocation  generated  by  the  model  for  vessels 
(vessel  size  classes  two  -  five)  in  the  last  year  of  simulated  results. 
The  sample  results  as  reported  by  Lassiter  [22,  p.  34]  included  marked 
differences  in  patterns  of  effort  allocation  between  years.   The  most 
notable  departure  of  the  simulated  results  from  the  actual  effort  allo- 
cation occurs  in  Areas  III  and  IV.   This  is  partially  explained  by  the 
fact  that  the  model,  over  the  simulated  period,  added  689  vessels  of 
size  class  four  to  the  fleet  in  Area  IV.   The  model  allows  a  rapid 
migration  rate  between  Areas  III  and  IV  and  thus ,  effort  becomes  concen- 
trated in  one  area  very  quickly.   A  second  area  where  agreement  between 
model  results  and  simulated  results  is  poor  is  the  intra-year  cyclical 
variation  in  effort  by  month.   Areas  I,  II,  III,  and  VII  appear  to  be 
completely  out  of  phase.   Table  5.5  aggregates  the  figures  presented  in 
Table  5.4  for  areas  between  which  vessels  migrate  easily.   The  figures 
in  Table  5.5  represent  percentage  allocation  of  effort  to  areas  which 
have  relatively  low  rates  of  migration  between  them.   Again,  the  addi- 
tional vessels  assigned  by  the  model  to  Area  IV  affect  the  results.   The 
intra-year  cyclical  variation  in  effort  by  the  model  appears  to  be 
completely  out  of  phase  with  that  reported  for  the  sample  in  the  aggregate 
area  containing  Areas  I,  II,  and  VII.   The  cyclical  variation  in  model 
results  and  sample  results  is  unclear. 

The  model  is  capable  of  adding  vessels  to  or  deleting  vessels  from 
the  fleet  in  response  to  profitability  considerations.   Over  the  30- 
year  period  simulated,  the  model  deleted  two  vessels  of  size  class  two 


112 
from  the  fleet  in  Area  I,  a  ?.8.6  jjercent  decrease  in  that  size  category 
for  that  area,  and  added  689  vessels  of  size  class  four  to  the  fleet  in 
Area  IV,  a  198.6  percent  increase  in  that  size  category  in  that  area. 
After  the  first  five  years  of  simulation,  the  model  had  deleted  the  two 
vessels  from  size  class  two  in  Area  I  and  added  448  vessels  to  size 
class  four  in  Area  lY.   There  were  no  additions  to  or  deletions  from 
the  fleet  other  than  those  mentioned  for  Areas  II  and  IV. 

Recent  data  on  the  cost  structure  of  the  industry  are  available 
only  in  very  aggregated  form.   Consequently,  the  following  discussion 
of  cost  estimates  used  in  the  model  does  not  correspond  precisely  to 
any  of  the  phases  of  the  validation  framework  presented  in  Chapter  IV. 
It  is  presented  to  indicate  the  basis  used  to  estimate  the  value  of  the 
fleet.   Firm  cost  data  may  be  found  in  Osterbind  and  Pantier  [27]  and 
the  National  Marine  Fisheries  Service  publication  Basic  Economic  Indi- 
cators;  Shrimp,  Atlantic  and  Gulf  [1],   The  annual  fixed  cost  charges 
employed  in  the  model  are  given  for  each  vessel  size  class  in  Table  5.6. 
These  figures  were  derived  from  data  presented  in  Osterbind  and  Pantier 
[27]  and  in  Table  3.6. 

If  the  annual  fixed  cost  charges  are  assumed  to  represent  some 
proportion  of  the  total  investment  in  vessel,  gear,  and  necessary  shore 
facilities,  then  dividing  the  annual  fixed  cost  charge  by  this  propor- 
tion would  yield  the  amount  of  the  total  investment.   The  proportion  of 
total  investment  charged  as  annual  fixed  cost  will  depend  on  the  average 
length  of  life  of  the  investment.   Table  5.6  presents  the  values  of  the 
total  investment  in  vessels,  gear,  and  necessary  shore  facilities  derived 
from  the  fixed  charges  used  in  the  model  under  three  assumptions  about 
the  average  life  of  the  investment.   An  investment  life  of  5.0  years 
corresponds  to  an  annual  fixed  charge  of  20  percent  of  the  total 


113 

Table  5.6.  Annual  fixed  cost  charges  par  vessel  employed  by  the 
computer  model  and  tlie  capitalized  values  that  these 
sums  represent 


Value 

cf 

investment 

assuming 

Vessel 
size  class 

Annual  fixed 
cost  charges 

an 

average  life 

of: 

5.0  years 

6. 7  years 

10.0  years 

1 

$  1,800 

$   9,000 

$  12,000 

$  18,000 

2 

3,600 

18,000 

2A,000 

36,000 

3 

9,600 

43,000 

64,000 

96,000 

4 

14,400 

72,000 

96,000 

144,000 

5 

24,400 

120,000 

160,000 

240,000 

114 
investment  while  a  b.7-ycar  lii'e  corresponds  to  ?.n  annual  charge  of  15 
percent  and  a  10.0-year  life  corresponds  to  an  annual  charge  of  10  per- 
cent.  Current  acquisition  costs  for  average  vessels  and  gear  in  each 
size  class  are  in  the  range  of  investment  values  derived  using  average 
investment  life-spans  of  5.0  and  6.7  years.   Assuming  a  fleet  size  as 
given  in  Table  4.6,  the  estimated  value  of  the  total  investment  in  the 
Gulf  shrimp  fleet  is  given  in  Table  5.7  under  the  three  assumptions 
about  average  vessel  and  gear  life  employed  in  constructing  Table  5.6. 
Table  5.7  also  includes  the  value  of  the  boats  and  vessels  in  the  fleet 
as  they  were  given  by  the  model  at  the  end  of  five  and  30  years  of 
simulation.   Values  presented  in  Table  5.6  were  used  in  calculating 
total  investment  in  fleet,  gear,  and  shore  installations  necessary  to 
vessel  operation  presented  in  Table  5.7.   As  a  check  on  these  figures, 
the  value  of  capital  and  liabilities  per  vessel  of  $71,200  as  given  in 
Basic  Economic  Indicators:   Shrimp,  Atlantic  and  Gulf  [1,  p.  9]  was 
used  along  with  a  value  for  boats  and  gear  of  $9,000  per  unit  to  esti- 
mate the  total  investment  in  the  fleet.   Examination  of  Table  5.7 
reveals  that  the  assumptions  of  average  investment  life  of  5.0  and  6.7 
years  give  total  industry  investment  values  that  bracket  the  value 
calculated  from  National  Marine  Fisheries  Service  data. 

Simulated  Results  for  the  Policies  Considered 

One  of  the  objectives  of  this  study  is  to  determine  whether  alter- 
native management  strategies  exist  which  improve  industry  efficiency 
from  the  point  of  view  of  various  groups  of  participants  in  the  industry 
as  well  as  reduce  overinvestment  in  the  industry.   Gordon  Tullock  [32] 
presents  a  discussion  of  regulatory  measures  for  a  fishery  designed  to 
achieve  various  objectives.   The  charges  needed  to  manage  a  fishery  in 


115 


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116 
an  efficient,  zero-profit  manner  arc  specified  as  theoretical  aggregates 
in  Chapter  II.   These  charges  correspond  to  the  landings  fee  and  vessel 
entry  charges  considered  here.   In  addition,  the  regulating  agencies  of 
the  various  states  involved  in  the  Gulf  shrirap  fishery  pursue  some 
management  policies,  including  closed  areas,  closed  seasons,  and  gear 
regulations,  designed  to  increase  the  age  (size)  at  v/hich  shrimp  first 
became  subject  to  capture.   The  specific  policies  considered  here  (based 
on  Tullock's  discussion,  the  development  in  Chapter  II,  and  current 
practices)  are: 

1.  No  controls; 

2.  A  set  of  policies  possibly  including  closed  seasons,  closed 
areas,  and  gear  regulations  designed  to  increase  the  age  at 
which  shrimp  begin  to  enter  the  catch  (called  simply,  age  at 
first  capture)  from  three  months  to  four  months; 

3.  An  annual  vessel  entry  fee,  by  vessel  size  class  of: 

vessel  size  class  (CRT)   less  than  5  5-19  20-49  50-79  80  & 

over 

annual  entry  fee  ($)         750      1,000  1,600  2,000  2,500 

4.  A  per  pound  landings  tax  of  $0.10  on  all  shrimp  sizes.   (Viewed 
as  a  percentage  of  ex-vessel  price,  this  tax  is  relatively 
higher  on  the  smaller  sizes  of  shrimp  which  command  lower 
prices.);  and 

5.  A  combination  of  the  vessel  entry  fee  charges  in  (3.)  and  the 
per  pound  landings  tax  described  in  (4.). 

The  $0.10  per  pound  landings  tax  was  arbitrarily  chosen.   The  annual 
vessel  entry  fees  were  derived  from  an  arbitrarily  chosen  fee  for  vessel 
size  class  four  of  $2,000  per  year  by  multiplying  this  fee  by  the 
average  sweep  capacity  per  vessel.   The  rationale  for  this  adjustment 


117 

is  that,  in  order  not  to  discriminate  araong  vessels  on  the  basis  of 
productivity,  the  annual  vessel  entry  fee  should  be  based  on  a  measure 
of  vessel  productivity.   The  most  convenient  measure  of  vessel  produc- 
tivity available  during  the  present  study  was  vessel  sweep  capacity  by 
size  class. 

The  computer  model  was  used  to  simulate  the  behavior  of  the  Gulf 
shrimp  industry  over  five-year  time  periods  for  the  five  different 
settings  of  the  policy  variables.   Table  5.8  presents  the  levels  of  the 
policy  variables  and  the  associated  average  annual  values  generated  by 
the  computer  model  for  the  total  catch,  wholesale  value  of  the  catch, 
ex-vessel  value  of  the  catch,  total  production  costs,  revenue  to  the 
control  authority  (the  authority  imposing  the  policies  and  collecting 
the  fees),  the  difference  between  total  production  costs  and  ex-vessel 
value  of  the  catch  (which  may  be  considered  a  net  return  to  fixed 
investment  if  all  variable  costs,  specifically  labor  costs,  are  consid- 
ered to  be  covered) ,  and  the  value  of  fixed  investment  in  the  fleet 
under  the  assumption  of  a  five-year  average  life  of  vessels  and  gear. 

Table  5.9  presents  the  rate  of  return  to  investment  represented  by 
the  net  return  and  value  of  investment  figures  in  Table  5.8  for  each  of 
the  policy  levels.   The  revenue  collected  by  the  control  authority  may 
be  considered  a  return  to  the  shrimp  resource.   The  disposition  of  this 
return  and  the  welfare  implications  of  alternative  dispositions  of  this 
return  are  beyond  the  scope  of  the  present  study.   However,  the  figures 
presented  in  Table  5.10  make  possible  some  interesting  comparisons. 
Table  5.10  presents  the  changes,  occasioned  by  instituting  the  policy 
variables,  in  the  quantities  listed  in  Table  5.8  from  the  situation  of 
no  controls.   In  addition.  Table  5.10  presents  the  sum  of  the  revenue 
to  the  control  authority  and  the  changes  in  wholesale  value  and  net 


118 

Table  5.8.   Average  annual  returns  from  the  Gulf  shrimp  catch,  costs 
to  the  industry  and  fixed  investment  ?Ln  the  industry 
assuming  a  five-year  investment  life  under  various 
settings  of  the  policy  variables 


Policy 
.    a 
settings 

Total  catch 

Wholesale 
value 

Ex-vessel 
value 

1 

96,498,298 

lbs. 

$136,067,890 

$95,391,740 

2 

96,498,224 

lbs. 

136,067,840 

95,391,680 

3 

94,303,328 

lbs. 

133,811,552 

94,883,072 

4 

92,724,624 

lbs. 

132,358,080 

88,322,608 

5 

92,199,424 

lbs. 

131,798,112 

87,940,096 

Policy 
.  ■'    a 
settings 

Total  prod, 
costs 

Rev.  to 
cont.  auth. 

Net 
return 

Value  of 
investment 

1 

$114,826,888 

$ 

0 

$-19,435,148 

$237,633,000 

2 

114,826,800 

0 

-19,435,120 

237,633,000 

3 

119,989,504 

8, 

,694 

,105 

-25,106,432 

217,833,000 

4 

102,985,264 

9, 

,272 

,454 

-14,662,656 

205,431,000 

5 

11,158,576 

17, 

,748 

,080 

-23,218,480 

205,431,000 

Tlefer  to  text,  page  116, 


119 

Table  5,9.   Rate  of  return  to  fixed  Investment  in  the  Gulf  shrimp 
fleet  under  various  settings  of  the  policy  variables 

Policy  settings Percentage  rate  of  return 

1  -  8.18 

2  -  8.18 

3  -11.53 

4  -  7.14 
3  -11.30 


a,. 


See  text,  page  116. 


120 


Table  3.10. 


Changes  in  average  annual  returns,  costs,  r.nd  investment 
occasioned  by  the  imposition  of  controls 


Chang 

es 

in: 

Policy 
settings 

Total  catch 

Wholesale 
value 

Ex-vessel 
value 

Total  prod, 
costs 

1 

0  lbs. 

$         0 

$        0 

$         0 

2 

-74  lbs. 

-50 

-60 

-88 

3 

-2,194,970  lbs. 

-2,256,338 

-508,668 

-5,162,616 

4 

-3,773,600  lbs. 

-3,709,810 

-7,069,132 

-11,841,624 

5 

-4,298,874  lbs. 

-4,269,778 

-7,451,644 

-3,668,312 

Revenue  to  cont. 

Changes 

in: 

Rev.  to 
cont.  auth. 

authority  plus 
changes  in 

Policy 
settings 

Net 
return 

Value  of 
investment 

wholesale  value 
and  net  return 

1 

$        0 

$         0 

$ 

0 

$        0 

2 

28 

0 

0 

-22 

3 

-5,671,281 

-19,800,000 

8,694,105 

766,486 

4 

4,772,492 

-32,202,000 

9,272,454 

10,335,136 

5 

-3,783,332 

-32,202,000 

17,748,080 

9,694,970 

^See  text,  page  116. 


121 

return  (which  reflect  the  difference  between  changes  in  ex-vessel  value 
and  production  cost).   This  sum  is  a  measure  of  what  is  left  over  from 
revenue  to  the  control  authority  after  adding  any  changes  in  wholesale 
and  ex-vessel  values  of  the  catch  and  deducting  any  changes  in  the  cost 
of  producing  the  catch.   Thus,  it  is  a  measure  of  the  net  money  returns 
obtained  from  instituting  a  particular  policy  exclusive  of  the  cost  of 
implementing  the  policy.   It  is  what  is  left  (after  compensating  all 
losers  and  taxing  away  all  gains)  to  apply  to  the  cost  of  implementing 
the  policy. 

Increasing  the  age  of  shrimp  at  first  capture  to  four  months  has 
essentially  no  effect  on  the  quantities  considered  in  Tables  5.8  and 
5.10.   Imposing  an  annual  vessel  entry  fee,  differentiated  by  size 
class  as  shown  in  Table  5.8,  reduces  total  catch,  the  wholesale  and  ex- 
vessel  values  of  the  catch,  and  the  net  return.   This  policy  increases 
total  production  costs  and  revenue  to  the  control  authority.   The  vessel 
entry  fee  policy  considered  produces  a  surplus  after  revenue  to  the 
control  authority  is  adjusted  for  changes  in  wholesale  value  and  net 
return  although  this  surplus  is  probably  not  large  enough  to  implement 
the  policy.   Imposing  a  landings  tax  on  shrimp  decreases  wholesale  value 
but  increases  net  return  since  production  costs  are  decreased  more  than 
the  ex-vessel  value  of  the  catch.   Thus,  the  revenue  to  the  control 
authority,  after  being  adjusted  for  changes  in  wholesale  value  and  net 
returns,  is  significant,  amounting  to  11.7  percent  of  the  ex-vessel 
value  of  the  catch.   Imposing  both  a  vessel  entry  fee  and  a  landings 
tax  produces  the  greatest  gross  revenue  to  the  control  authority  but  a 
slightly  smaller  adjusted  revenue  than  a  landings  tax  alone  due  to  the 
larger  decline  in  wholesale  value  of  the  catch  and  a  decline  in  net 
return  rather  than  an  increase.  "Both  the  entry  fee  and  landings  tax 


122 
policies  reduce  investment  in  the  fleet  although  when  the  polirieL;  tire 
used  singly  the  landings  tax  policy  seems  to  more  effectively  reduce 
investment. 

Policy  Implications 

Considering  the  relatively  primitive  nature  of  the  model  used  to 
obtain  the  results  presented  here,  caution  must  be  used  in  drawing 
implications  about  the  various  regulatory  measures  considered  on  the 
basis  of  those  results.   In  addition,  different  conclusions  may  be 
drawn  as  to  the  relative  desirability  of  a  proposed  regulatory  policy 
depending  on  whether  one  takes  the  point  of  view  of  the  consumer,  the 
vessel  owners,  the  vessel  crew,  or  processors.   The  benefit  to  society 
of  a  policy  will  vary  depending  upon  the  segment  of  society  that  the 
individual  estimating  the  benefit  is  most  closely  associated  with.   Such 
conflicts  seem  to  be  inevitable  and  the  approach  taken  here  is  to  rank 
the  policies  on  their  effectiveness  in  attaining  several  alternative 
objectives.   The  assumption  is  made  that  all  the  policies  are  equally 
costly  to  implement  with  the  exception  of  the  policy  of  no  controls, 
which  may  be  implemented  at  zero  administrative  cost.   No  estimates  of 
implementation  costs  have  been  made. 

If  the  revenue  to  the  control  authority  is  considered  to  be  a  return 
to  the  resource  and  the  objective  of  maximizing  this  return  is  assumed, 
then  the  results  presented  in  Tables  5.8  and  5.10  indicate  that  a  com- 
bination of  the  entry  fee  and  the  landings  tax  policies  is  most  effective 
in  obtaining  this  objective.   The  landings  tax  policy  ranks  second  in 
effectiveness.   The  vessel  entry  fee  policy  ranks  third.   The  other 
policies  give  no  return  to  the  control  authority.   Since  implementation 
costs  are  unknown,  the  net  effects  of  the  landings  tax  and  vessel  entry 


123 
fee  policies  cannot  be  determined  and  they  cannot  be  compared  on  a  ''net" 
basis  with  the  costless  alternative  of  no  controls.   The  policy  relating 
to  age  at  first  capture,  since  it  produces  no  revenue  to  the  control 
authority  and  has  positive  implementation  costs,  is  clearly  inferior  to 
the  alternative  of  no  controls  on  the  basis  of  maximizing  returns  to 

the  resource. 

If  maximization  of  net  return  to  investment  in  the  Gulf  of  Mexico 
shrimp  fleet  is  taken  as  the  objective  and  policy  implementation  costs 
are  ignored,  then  based  on  the  results  presented  in  Table  5.8,  a  tax  on 
landings  seems  to  be  the  most  effective  means  of  attaining  this  objec- 
tive.  The  policy  relating  to  age  at  first  capture  ranks  second  while  a 
policy  of  no  controls  ranks  a  very  close  third.   A  combination  of  entry 
fees  and  a  landings  tax  ranks  fourth  in  effectiveness.   Imposition  of 
entry  fees  alone  is  the  least  desirable  policy  for  attaining  the  objec- 
tive of  maximization  of  net  revenue  to  the  fleet. 

If  maximization  of  the  total  catch  is  taken  as  the  objective,  a 
policy  of  no  controls  is  most  effective.   Regulating  age  at  first  cap- 
ture ranks  second  while  an  entry  fee,  landings  tax,  and  combination  of 
the  two  rank  third,  fourth,  and  fifth,  respectively. 

If  the  objective  of  industry  regulation  is  to  reduce  the  value  of 
investment  in  the  Gulf  of  Mexico  shrimp  fleet,  the  per  pound  landings 
tax  policy  and  a  combination  of  the  landings  tax  and  entry  fee  policies 
are  equally  effective  in  reducing  total  investment.   The  entry  fee  used 
alone  is  the  next  most  effective  policy  while  the  age  at  first  capture 
and  no  controls  policies  do  not  reduce  investment  in  the  fleet. 

Table  5.11  contains  the  total  production  costs  incurred  by  the 
fleet  per  pound  of  shrimp  produced  under  the  different  policies.   If 
the  objective  of  regulation  is  to  minimize  per  pound  product  cost  by 


124 

Table  5.11.   Average  annual  total  production  costs  incurred  by  the 

Gulf  of  Mexico  shrir.ip  fleet  per  pound  of  shrimp  produced 
and  average  annual  v/holcsaJe  price  of  shrimp  produced 
and  average  annual  wholesale  price  under  alternative 
policies 

Per  pound 
Policy production  costs Wholesale  price 

1  $1.19  $1.41 

2  $1.19  $1.41 

3  $1.27  $1.42 

4  $1.11  $1.43 

5  $1.22  $1.43 

See  text,  page  116. 


125 

the  fleet,  a  per  pound  landings  tax  is  the  most  effective  policy.   No 
controls  and  regulating  age  at  first  capture  are  tied  for  the  second 
position.   A  combination  of  landings  tax  and  entry  fee  is  the  next 
most  effective  while  a  vessel  entry  fee  alone  produces  the  highest  costs 
per  pound. 

The  model  does  not  presently  provide  information  that  can  be  used 
directly  to  evaluate  the  effects  of  the  policies  on  consumers.   However, 
if  the  wholesale  value  of  the  catch  is  accepted  as  a  proxy  for  retail 
value  of  the  catch  and  some  assumptions  concerning  retail  demand  are 
accepted,  then  some  tentative  inferences  concerning  the  effects  of  the 
policies  on  consumers  can  be  made.   Doll  [16,  pp.  35,  70-71]  finds  that 
the  price  elasticity  of  retail  demand  (in  his  annual  model)  at  the  mean 
of  price  and  consumption  is  -0.63  and  that  the  price  elasticity  of 
wholesale  demand  (in  his  quarterly  model)  is  -0.50  at  the  means  of  the 
variables.   Thus,  retail  and  wholesale  demands  as  reported  by  Doll 
appear  to  be  relatively  inelastic,  a  finding  corroborated  by  Miller 
et__al.  [24,  p.  45].    The  significance  of  these  results  for  evaluating 
the  effect  of  the  policies  on  consumers  lies  in  the  fact  that,  given  a 
downward  sloping  demand  curve,  changes  in  quantity  taken  in  the  neigh- 
borhood of  the  quantity  used  to  calculate  the  price  elasticity  produce 


2 

The  fact  that  as  catch  is  reduced  in  Table  5.8  wholesale  value  of 

the  catch  is  reduced  also  might  seem  to  contradict  the  assertion  that 
wholesale  demand  is  price  inelastic  in  this  range  of  landings.   However, 
as  domestic  landings  decrease  in  the  model,  imports  increase  after  a 
quarter  lag  (see  equation  4.3).   Thus,  the  effect  of  decreased  domestic 
landings  on  the  total  annual  supplies  of  shrimp  available  to  meet  whole- 
sale demand  is  not  readily  predictable.   It  would  appear  from  the  results 
in  Table  5.8  that,  as  landings  decrease,  imports  increase  by  enough  so 
that  the  increase  in  the  wholesale  price  is  not  enough  to  produce  the 
increase  in  wholesale  value  of  the  catch  that  would  be  expected  if 
landings  were  to  decrease  and  imports  were  to  remain  constant. 


126 
larger  changes  in  consumer  surp3.us  (measured  as  the  area  under  the. 
demand  curve  and  above  the  price  liiie)  for  price  inelastic  demand  curves 
than  for  price  elastic  demand  curves.   For  example,  there  is  no  change 
in  consumer  surplus  as  defined  here  in  response  to  quantity  changes 
when  consumer  demand  is  perfectly  elastic;  there  is,  in  fact,  no  con- 
sumer surplus.   For  a  complete  inelastic  consumer  demand  curve,  minute 
changes  in  quantity  supplied  produce  infinitely  large  changes  in  con- 
sumer surplus. 

The  average  annual  wholesale  prices  occurring  under  each  policy 
setting  are  presented  in  Table  5.11.   The  policies  do  not  cause  large 
changes  in  v/holesale  price.   If  retail  price  behavior  is  similar,  most 
of  the  effect  on  consumers  of  the  reduction  in  domestic  landings 
resulting  from  implementation  of  the  policies  would  seem  to  be  offset 
by  increases  in  imports.   However,  with  apparent  annual  consumption  of 
fresh  and  frozen  shrimp  of  357.3  million  pounds  in  1970  [30,  p.  13, 
preliminary  estimate]  coupled  with  an  inelastic  retail  demand  at  that 
quantity,  even  a  small  increase  in  retail  price  resulting  from  a  propor- 
tionately smaller  decrease  in  quantity  available  will  result  in  a 
sizeable  loss  in  consumer  surplus.   Assuming  that  the  increase  in 
average  wholesale  prices  indicated  in  Table  5.11  represents  the  extent 
of  the  price  increase  at  the  consumer  level,  then  the  annual  loss  in 
consumer  surplus  occasioned  by  implementing  a  vessel  entry  fee  is  on 
the  order  of  3.5  million  dollars  as  compared  to  no  controls.   The  annual 
loss  in  consumer  surplus  occasioned  by  imposing  a  landings  tax  or  a 
combination  of  a  landings  tax  and  an  entry  fee  is  on  the  order  of  7.0 
million  dollars.   Regulating  age  at  first  capture  produces  no  signifi- 
cant reduction  in  consumer  surplus.   Thus,  assuming  that  consumers  do 
not  pay  for  implementing  the  regulatory  policies,  do  not  share  in  the 


revenues  these  policies  produce,  and  desire  to  minimize  less  of  consumer 
surplus,  policies  of  no  controls  or  regulating  age  at  first  capture 
would  seem  to  be  preferabl-';  co  cor.suinars.   A  vessel  entry  fee  ranks 
second  in  minimizing  loss  of  consumer  surplus  while  a  per  pouud  landings 
tax  and  a  combination  of  a  per  pound  landings  tax  and  a  vessel  entry  fee 
cause  the  largest  losses  in  consumer  surplus  as  measured  here. 

The  column  in  Table  5.10  headed  "Revenue  to  control  authority  plus 
changes  in  wholesale  value  and  net  return"  presents  an  alternative  cri- 
terion for  ranking  the  policies.   Assume  that  the  decreases  in  wholesale 
value  represent  losses  to  society  while  increases  in  net  return  to  the 
fleet  (changes  in  ex-vessel  value  less  changes  in  total  production 
costs)  and  revenue  to  the  control  authority  represent  gains  to  society 
(ignoring  costs  of  policy  implementation).   Then  the  sum  of  changes  in 
wholesale  value  of  the  catch,  net  return  to  the  fleet,  and  revenue  to 
the  control  authority  represents  the  net  gain  to  society  from  implement- 
ing any  one  of  the  policies.   Of  course,  implementation  costs  cannot  be 
ignored  and  in  choosing  between  a  policy  of  no  controls  and  one  involving 
some  regulation,  the  gain  to  society  from  implementing  a  policy  must  be 
calculated  net  of  the  cost  of  implementation.   Assuming  that  all  the 
policies  involving  regulation  are  equally  costly  and  that  the  objective 
is  to  maximize  net  gain  (minimize  net  loss)  to  society,  the  policy 
involving  a  per  pound  tax  is  most  effective  based  on  the  information  in 
Table  5.10.   A  policy  involving  both  a  tax  on  landings  and  a  vessel 
entry  fee  is  a  close  second  while  the  vessel  entry  fee  alone  ranks  a 
poor  third.   Regulating  age  at  first  capture  produces  negative  gain  to 
society  and  thus,  is  inferior  to  a  policy  of  no  controls  even  without 
considering  the  costs  of  regulating  age  at  first  capture. 


128 

As  is  evident  from  tlie  discussion  in  this  section,  no  one  policy 
is  clearly  superior  for  attaining  all  objectives.   The  ranking  of  the 
effectiveness  of  the  policies  depends  on  the  objective  to  he  attained. 
The  one  clear  implication  to  emerge  from  this  discussion  is  that  a 
policy  designed  to  increase  age  at  first  capture  is  never  preferable  to 

one  involving  no  controls,  especially  when  costs  of  implementation  are 

3 
considered.    However,  even  this  conclusion  must  be  accepted  cautiously, 

remembering  that  many  of  the  parameter  estimates  used  in  the  model  are 
initial  estimates.   The  ordering  of  the  remaining  policies  by  effec- 
tiveness changes  as  objectives  are  changed.   It  is  possible  that  the 
policy  types  would  change  ordering  for  a  given  objective  if  the  regula- 
tory variables  were  set  at  different  relative  levels.   Thus,  it  must 
be  remembered  that  the  above  discussion  is  specific  to  stated  levels 
of  the  policy  variables.   It  is  quite  possible  that  different  combina- 
tions of  values  for  the  annual  vessel  entry  fee  and/or  landings  tax, 
for  example,  would  result  in  different  sets  of  rankings  of  the  policy 
alternatives  for  given  objectives.   What  is  really  needed  is  additional 
research  to  vary  each  policy  variable  to  determine  its  optimum  level 
with  respect  to  a  given  objective  or  criterion.   A  comparison  of 
policies  set  at  their  optimum  levels  with  regard  to  given  objectives 
would  lead  to  more  meaningful  rankings . 

The  implications  stated  here  are  meant  to  describe  the  relative 
effects  of  different  and  specific  types  of  policies,  not  to  endorse  a 
particular  policy  in  a  given  case.   Also,  more  meaningful  policy 


3 

It  is  interesting  to  note  that  policies  designed  to  increase  age 

at  first  capture  are  the  only  regulations  currently  in  effect  in  the 
industry  and  these  are  enforced  by  individual  states. 


129 

rankings  will  he   possible:  in  an  environment  in  which  the  objectives  and 

limitations  oT  the  policy-makers  are  kno\>m  and  taken  into  account.  In 

addition,  there  are  improvements  and  extensions  needed  in  the  model  that 

will  increase  the  reliability  of  the  information  it  provides.   Some  of 
these  improvements  and  suggestions  for  further  research  are  discussed 
in  Chapter  VI. 


CHAPTER  VI 


RECAPITULATION  OF  THE  PRESENT  STUDY  WITH 
SUGGESTIONS  FOR  IMPROVEMENTS  AND  FURTHER  WORIC 


The  present  study  is  summarized  in  this  chapter  and  attainment  of 
the  objectives  is  assessed.   A  simulation  model  is  not  easily  brought 
to  perfection  and  certain  improvements  needed  in  the  present  model  are 
cited.   In  addition,  this  study  provides  the  basis  for  several  sugges- 
tions that  may  prove  fruitful  for  further  research. 


Recapitulation  of  Objectives  and 
Evaluation  of  Achievements 


As  listed  in  Chapter  I,  the  objectives  of  this  study  were  to: 

1.  Determine  the  responses  of  individual  fishing  firms  in  the 
Gulf  of  Mexico  shrimp  industry  and  the  resultant  aggregate 
effect  for  the  industry  to  changes  in: 

a.  The  shrimp  population  in  the  Gulf  of  Mexico; 

b.  Technological  conditions  of  harvesting  and  processing;  and 

c.  Demand  conditions. 

2.  Determine  whether  alternative  management  strategies  exist 
which  will  improve  industry  efficiency  in  a  social  sense, 
reducing  overinvestment  and/or  the  extent  of  non-optimal 
husbandry  practices  that  occur  as  a  result  of  the  free  use 
of  an  open  access  resource. 

The  steps  involved  in  pursuing  the  objectives  involved  developing 
a  bioeconomic  theory  of  a  fishery  and  applying  it  to  the  shrimp  resource, 

130 


131 

A  rather  general  abstiact  model  of  shrimp  resource  resulted  from  this 
application.   Based  on  the  abstract  model,  a  simulation  model  of  the 
Gulf  of  Mexico  shrimp  industry  was  developed.   Experimentation  with  the 
simulation  model  produced  empirical  results  relating  to  alternative 
policies . 

Objectives  l.a.  and  I.e.  did  not  emerge  as  the  primary  objectives 
of  the  study.   They  were  achieved,  however,  to  the  extent  that  a  model 
incorporating  estimates  of  the  indicated  responses  was  realized.   Objec- 
tive l.b.,  relating  to  responses  of  firms  and  the  industry  to  changes 
in  technology,  was  not  satisfied.   The  model  resulting  from  this  study 
could,  however,  incorporate  certain  types  of  technological  changes  such 
as  changes  in  trawling  effectiveness  or  ability  of  a  vessel  to  fish 
more  days  per  month. 

Objective  2.  emerged  as  the  primary  concern  of  this  study.   The  part 
of  the  second  objective  relating  to  non-optimal  husbandry  practices  was 
approached  only  indirectly  through  the  effect  of  the  policies  on  measures 
of  the  value  of  the  catch.   The  effects  of  the  specified  regulatory 
measures  on  investment  in  the  harvesting  sector  of  the  industry  were 
determined.   In  addition,  the  relative  effects  of  the  regulatory  policies 
on  several  measures  of  industry  performance  were  discussed.   Part  of  the 
objectives  set  forth  at  the  beginning  of  this  study  were  attained  to  a 
limited  degree.   In  order  to  more  fully  achieve  the  stated  objectives, 
there  are  certain  parameter  improvements  and  model  extensions  that  need 
to  be  made. 


Improvements  Needed  in  the  Present  Model 
and  Suggestions  for  Further  Work 


Most  of  the  work  that  seems  to  be  needed  involves  obtaining  more 
complete  data  to  improve  parameter  estimates  within  the  model.   In  this 


132 
regard,  sensitivity  analysis  on  the  present  parameter  estimates  to 
determine  which  ones  are  the  most  critical  and  thus,  need  more  careful 
estimation  would  seem  to  be  a  logical  starting  place.   Model  improve- 
ments are,  however,  not  without  cost,  and  potential  gains  from  model 
improvements  must  be  weighed  carefully  against  the  costs  of  making  and 
implementing  the  improvements  before  research  is  undertaken  to  improve 
the  model. 

Improvements  are  needed  of  estimates  of  the  frequency  distribution 
of  shrimp  recruits  by  species,  area,  and  month  of  year.   The  means  and 
standard  deviations  used  in  the  model  to  generate  recruits  are  very 
rough  estimates  indeed.   Other  areas  for  improvement  in  the  basic 
resource  model  include  improving  the  mortality  estimates  used  in  the 
survival  equations,  differentiating  the  growth  of  shrimp  by  species  and 
season,  as  well  as  relating  the  fishing  mortality  suffered  by  a  size 
class  of  shrimp  to  the  fishing  effort  of  specific  size  classes  of 
vessels.  As  an  example  of  this  latter  recommendation,  it  is  unlikely 
that  vessels  over  80  gross  registered  tons  contribute  very  much  to  the 
fishing  mortality  of  the  smaller  size  classes  of  shrimp  that  are  taken 
in  relatively  shallow  water.   On  the  other  hand,  boats  (craft  of  less 
than  five  net  registered  tons)  do  not  contribute  to  the  fishing  mortal- 
ity suffered  by  the  larger  size  classes  of  shrimp  in  the  deep-water 
grounds  away  from  the  coastal  areas.   This  problem  may  be  solved  by 
considering  fishing  effort  by  vessel  size  class  to  be  specific  to  parts 
of  an  area  by  depth  or  by  inshore  versus  offshore  classification.   In 
addition,  more  accurate  description  of  the  geographic  range  of  shrimp 
of  different  size  classes  may  contribute  to  more  accurate  mortality 
rates. 


133 

The  model  of  the  harvesting  sector  of  the  industry  needs  refinement 
witli  respect  to  the  process  by  vzhich  vessels  enter  and  leave  the  fleet, 
allocate  fishing  effort  among  areas,  and  determine  degree  of  fishing 
intensity.   The  improvement  in  these  areas  could  come  in  the  form  of 
more  complete  specification  rather  than  restructuring  of  the  model. 

A  study  that  would  perhaps  add  much  to  the  present  model  involves 
identifying  the  relative  magnitudes  of  the  determinants  of  cost  per  day 
fished  by  vessels  in  different  size  classes  fishing  in  different  areas 
of  the  Gulf  of  Mexico.   The  vessel  costs  per  day  fished  obtained  from 
such  a  study  could  be  combined  with  the  catch  rate  and  returns  figures 
of  this  study  to  determine  net  revenue  more  accurately.   Given  accurate 
data  on  net  revenue  and  effort  by  vessel  size  class  and  area,  a  study 
to  determine  the  causal  relationships  between  net  revenue  and  effort 
should  improve  the  vessel  allocation  and  effort  intensity  schemes. 

The  model  of  the  marketing  and  demand  sector  is  the  product  of 
Doll  [16].   If  this  model  were  respecified  to  conform  to  a  monthly  time 
interval  and  expanded  to  provide  an  estimate  of  retail  demand  and  ex- 
vessel  price  by  size  class  of  shrimp,  it  would  be  more  conformable  to 
the  data  requirements  of  the  simulation  model.   This  extension  of  the 
model  would  allow  development  of  a  more  refined  measure  of  consumer 
surplus  and,  consequently,  a  more  complete  evaluation  of  the  effects 
of  proposed  regulatory  policies  on  consumers  as  well  as  other  segments 
of  the  industry. 

Meaningful  systems  analysis  projects  are  evolutionary  in  that  they 
require  models  which  are  continually  updated  to  keep  them  relevant  from 
the  point  of  view  of  the  current  physical,  biological,  and  decision 
environments.   All  of  the  above  suggestions  for  further  work  would  not, 
of  course,  result  in  a  perfect  model. 


APPENDIX  I 


Compute!"  program,  SHRIMP,  and  data  necidcd  to 
estimate  recruits  b}'  species  by  mouth  and  area 


135 


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»-<  CM 


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,-(coinmofn'<^CT>coooCT^f*-^~oocx) 


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t-ip-i  ,-ir-<»-«  f-iiM>l"in  »-<oin^-  m>i->o 

r-i  rn  <-i 


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147 


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ln  o  ^o  CO  »o  tn 
in  •-<  r-  r^  in  fvj 

r-<  .—(  CM  CA  CO 


CO 


in  >o 
vf  CM  r^ 
in  (\)  '-< 


sj-  in  in 
CO  ir»  o 
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ro  O  ir> 


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in 
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30 


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in 


00  (V>  r-l  .-J 

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in  CM  00 
ro 


o^  CM  CO  m  CO 

vO  f>-  vO  o  o 

CO 


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CMCMfOCMoOvi-inu'XvtinrOCMl^ 


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in 

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CM  PO  f,-)  f\!  t^ 


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CM  CM  CM  CO  CO  t*^  CO  CO  CO  ro 

r-(>-)f-Hr-<'-<<-<<--<t-<>— *•-' 


in'-fojro^inor^ 
co 


--icM'<\«i-Ln>or>-coCT< 


CvJ  CO 


APPENDIX  II 


Simulation  program,  BIGOKE,  and  initialization  data 


149 


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LIST  OF  REFERENCES 


1.  Anonymous,  Basic  Economic  Indicatoi's;   Shrimp,  Atlantic  and  Gulf, 
Working  Paper  No.  57,  Division  of  Economic  Research,  National 
Marine  Fisheries  Service,  College  Park,  Maryland,  May  1970. 

2.  Anonymous,  Gulf  Coast  Shrimp  Data,  United  States  Department  of 
Coimnerce,  National  Oceanic  and  Atmospheric  Association,  National 
Marine  Fisheries  Service,  Washington,  D.  C. ,  in  cooperation  with 
Fishery  Agencies  of  Florida,  Alabama,  Mississippi,  Louisiana,  and 
Texas.   Annual  SuBimaries  for  1967,  1968,  and  1969. 

3.  Anonymous,  Marine  Economics  Data,  Oregon  State  University  Sea 
Grant,  Marine  Advisory  Program,  Oregon  State  University  Coopera- 
tive Extension  Service,  Corvallis,  Oregon. 

4.  Anonymous,  "V'ater  Teiaperature  Guide  to  ShriDip  and  Tuna,"  Fishing 
News  Inter,  ational  10,  No.  1,  34,  37  (vTanuary  1971)  as  abstracted 
in  Coiiuiercial  Fisheries  Abstracts,  National  Marine  Fisheries 
Service,  United  States  Department  of  Comnercc,  July  .1971,  pp.  7-8. 

5.  Arnold,  V.  ,  An  Analysis  to  Determine  Optimum  Shrin'i'  Fishing  Effort 
by  Area,  Working  Paper  No.  40,  Division  of  Econom.ic  Research, 
National  Marine  Fisheries  Service,  College  Park,  Maryland,  January 
1970,  196  pages. 

6.  Barry,  E.  J.,  "Gulf  Fisheries  (Selected  Areas):   1969,"  Division 
of  Statistics  and  Market  News,  National  Marine  Fisheries  Service, 
New  Orleans,  Louisiana,  February  19/1. 

7.  Berry,  Pdchard  James,  "Dynamics  of  Lhe  Tortugas  (Florida)  Pink 
Shrimp  Population,"  Doctoral  Dissertation,  University  of  Rliode 
Island,  1967. 

8.  Boutwell,  Ken  and  McMinimy,  Vernon,  "Use  of  Mathematical  Simula- 
tion Models  in  Analyzing  Agricultural  Policies,"  draft  of  an 
Unpublished  Memorandum,  1967. 

9.  Bromley,  Daniel,  Economic  Efficiency  in  Common  Property  Natural 
Resource  Use:   A  Case  Study  of  the  Ocean  Fishery,  V^Jorking  Paper 
No.  28,  Division  of  Economic  Research,  Bureau  of  Conmiercial 
Fisheries,  College  Park,  Maryland,  July  1969,  162  pages.   Also 
published  as  a  Doctoral  Dissertation  in  the  Department  of  Agricul- 
tural Economics  at  Oregon  State  University,  Corvallis,  Oregon,  1969. 

10.   Captiva,  Francis  J.,  "Changes  in  Gulf  of  Mexico  Shrimp  Trawler 

Design,"  paper  presented  at  Conference  on  Canadian  Shrimp  Fishery, 
Saint-John,  N.  B.,  October  27-29,  1970. 

180 


181 

n    fhristv  Francis  T.,  Jr.  and  Anthony  Scott,  Tjie_Co2moiLWGalthJjl 

Ocpan  Flshp.-ies:  c._^^Pvr,h1  ..^^.  of  Growth  and  Economic  AUocatxon. 
pabli'ibrd1^r"'R^i^rces  for  the  Future,  Inc.,  by  The  Johns  Hopkins 
Prej-s,  Baltimore,  Maryland,  1965. 

12.  Ciriacy-Wantrup ,  S.  V.,  Rescu£c_e_Conserva^on_^_Eco^^ 

Policy,  University  of  California  Press,  Berkeley,  Californxa,  IJ^i. 

13.  Creameans,  J.  F..,  "m.y  Simulation,"  paper  origiur.lly  giy^n  at  a 
symposium  of  the  Washington,  D.  C.  Chapter  of  the  Assoc.atxon  for 
Computing  Machinery,  May  18,  1967. 

14  Crutchfield,  James  P.  and  Giulio  Poatecorvo,  The_Jacifi^_Salm.Dn 
Fisheries,  published  for  Resources  for  the  Future,  Inc.,  by  Ine 
J^ns  Hopkins  Press,  Baltimore,  Mar>'land,  1969. 

15.  Crutchfield,  James  P.  and  Arnold  Zellner,  "Economic  Aspects  of  the 
Pacific  Halibut  Fishery,"  FTc^herv  Industrial  Research,  Vol.  1, 

No.  1,  Fish  and  Wildlife  Service,  April  1962. 

16.  Doll  ,  John  P.  ,  An  Econometric  Ana3^sj^_^LlJ2^iL-^A^-£J^gELii^rj^^ 
Working  Paper  No.  79,  Division  of  Economic  Research,  !',c.ticnai 
Marine°Fisheries  SerA'ice,  College  Park,  Maryland,  Feb  ruary  19/1. 

17.  Forrester,  Jay  U. ,  Industrial  Dynamics,  2nd  printing.  The  M.I.T. 
Press,  Cambridge,  Massachusetts,  June  1962. 

18.  Geisler,  M.  A.,  Haythorn,  W,  W. ,  and  Stager,  W  A.   "Simulation 
and  the  Logistics  Systems  Laboratory,"  Mem.orandum  El-I-32dl-PK 
prepared  for  United  States  Air  Force  Project  Rand,  September  1.62. 

19.  Gordon,  H.  Scott,  "The  Economic  Theory'  of  a  Common-Property 
Resource:   The  FisheiT,"  Journal  of  PoliticaJJEconom^,  Vol.  LXli, 
No.  2,  April  1954,  pp.  124-142. 

20.  Gulland,  J.  A.,  Manual^liLethojl^_JorJlslL.St^^^ 
li_llsh.Po2ulatiirAii^iii,  Food  and  Agriculture  Organxzatxon  of 
the  United  Nations,  Rone,  1969. 

21.  IBM  Svstem/360  Fortran  IV  Language,  IBM  Corporation,  Prograinming 
Syster.-£  Publications,  New  York,  New  York,  1966. 

22.  Lassiter,  Roy  L.,  Utilization  of  U.S.  Otter-Trawl  Shrimp  Vessels 
in  the  Gulf  Area,  1959-1961,  Bureau  of  Business  and  Economic 
Research,  University  of  Florida,  Gainesville,  Florida,  1964. 

23.  Lyles,  Charles  H.  ,  ti^ery__Statistics._ol^heJIn^         Bureau 
of  Commercial  Fisheries,  Washington,  D.  C,  1939-1967. 

24.  Miller,  M.  ,  D.  Nash,  and  F.  Schuler,  Industrx^AnaJ^:sa^_of_Gulf 
Area  Frozen  Processed  Shrimp  and  an  Estimation  of  Its  Iconomic  ^^ 
Adaptability  to  Radiation  Processing,  Working  Paper  No.  16,  Divi 
sion  of  Economic  Research,  Bureau  of  Commercial  Fisheries,  College 
Park,  Maryland,  October  1969,  100  pages. 


182 

25.  Orcutt,  G.  H.  ,  "Simulation  of  Economic  Systems,"  The  American 
Econoiuic  Review,  Vol.  50,  No.  5,  December  1960,  pp.  893--907. 

26.  Osborn,  Kenneth  W.  ,  Bruce  W.  Maghan,  and  Shelby  15.  Drumraond,  Gulf 
of  Mexico  Shrimp  Atlas,  United  States  Department  of  the  Interior, 
Bureau  of  CoirjTjercial  Fisheries,  Circular  312,  VJashington,  D.  C., 
May  1969. 

27.  Osterbind,  C.  C.  and  R.  A.  Pantier,  Economic  Study  of  the  Shrimp 
Industry  in  the  Gulf  and  South  Atlantic  States,  Bureau  of  Economic 
and  Business  Research,  University  of  Florida,  GainesviDlej  Florida, 
1965. 

28.  Scott,  Anthony,  "The  Fishery:   The  Objectives  of  Sole  Ownership," 
Journal  of  Political  Economy,  Vol.  LXIII,  No.  2,  April  1955, 

pp.  116-124. 

29.  Smith,  V.  L.,  "Economics  of  Production  from  Natural  Resources," 
The  American  Economic  llcview,  Vol.  LXIII,  No.  3,  Part  1,  June  1968, 
pp.  409-A31. 

30.  Surdi,  Richard  W.  and  Donald  R.  Wiittaker,  principal  contributors, 
Shellfish:   Situation  and  Outlook:   1970  Annual  Review,  Current 
Economic  Analysis  S-20,  National  Marine  Fisheries  Service,  United 
States  Department  of  Commerce,  Washington,  D.  C. ,  March  1971. 

31.  Tyner,  Fred  H. ,  Jr.,  "A  Simulation  Analysis  of  the  Economic  Struc- 
ture of  U.  S.  AgiiculLuie,"  Doctoial  Dissertation,  Oklahoma  State 
University,  Stillwater,  Oklahoma,  May  3  967. 

32.  Tullock,  Cordon,  The  Fisheries  ...  Some  Radical  Proposals,  Ecsays 
in  Economics  No.  6,  University  of  South  Carolina,  Bureau  of 
Business  and  Economic  Research,  School  of  Business  Administration, 
Columbia,  South  Carolina,  February  1962.,  29  pages. 

33.  V>Tiittaker,  David  A.,  Jr.,  "Economi.c  Effects  of  Trade  Policies  on 
the  Shrimp  Fisheries  of  the  United  States  and  the  Latin  American 
Nations,"  Doctoral  Dissertation,  University  of  Florida,  Gainesville, 
Florida,  1971. 


ADDITIONAL  REFERENCES 


Bator,  Francis  M. ,  "The  Simple  Analytics  of  Welfare  Maximization,"  Tlie 
American  Economic  Review,  Vol.  XLVII,  No.  1,  March  1957,  pp.  22-59. 

Bell,  F .  W . ,  Estima t ion  of  the  Economic  Benefits  to  Fishermen,  Vessels 
and  Society  From  Linited  Entry  to  the  Inshore  U.  S.  Northern  Lobster 
Fishery,  Working  Paper  ho.    36,  Division  of  Economic  Research,  Bureau  of 
Commercial  Fisheries,  College  Park,  Mai-yland,  March  1970. 

Bell,  F.  W.  and  J.  E.  Hazleton,  Recent  Developments  and  Research  in 
Fisheries  Economics ,  published  for  The  New  England  Economic  Research 
Foundation  by  Oceana  Publications,  Inc..  Dobba  Ferry,  New  York,  1967. 

Carlson,  E.,  Bio-Economic  Model  of  a  Fishery  (Primarily  Demersal) , 
Working  Paper  No.  12,  Division  of  Economic  Research,  Bureau  of  Commer- 
cial Fisheries,  College  Park,  Maryland,  March  1969. 

Cleary,  Donald  P..  Demand  and  Price  Structure  for  Shrimp  >  Working  Paper 
No.  15,  Division  of  Econo'iiic  Research,  Bureau  of  Commercial  Fisheries, 
College  Park,  Maryland,  June  19'J9. 

Crulchfield,  J.  A.,  "Econor.ic  Objectives  of  Fishery  Management,  The 
Fislieries;   Problems  j.n  Resource  Management,"  University  of  Washington 
Press,  Seattle,  Washington,  1965,  pp.  43-65. 

Food  and  Agricultural  Organi?^ation  of  the  United  Nations,  Yearbook  of 
Fi sh ery  Statistics,  Vols.  26  and  27,  FAO,  Rome,  Italy,  1968. 

Nash,  D.  and  F.  Bell,  An  Inventory  of  Demand  Equations  for  Fishery 
Products,  Working  Paper  No.  10,  Division  of  Economic  Research,  Bureau 
of  Commercial  Fisheries,  College  Park,  Maryland,  July  1969. 

Ricker,  William  E.,  Methods  of  Estimating  Vital  Statistics  of  Fish 
Populations ,  Indiana  University  Publications  Science  Series  No.  15, 
Blooinlngton,  Indiana,  1948,  101  pages. 

Samuelson,  Paul  A. ,  "Contrast  Between  Welfare  Conditions  for  Joint 
Supply  and  for  Public  Goods,"  The  Review  of  Economics  and  Statistics, 
Vol.  LI,  February  1969,  pp.  26-30. 

Scott,  A.  D.  ,  Economics  of  Fisheries  Management:   A  Symposium,  Institute 
of  Animal  Resource  Ecology,  The  University  of  British  Colombia,  Canada, 
1970. 

Sokoloski,  A.,  Some  Elements  of  an  Evaluation  of  the  Effects  of  Legal 
Factors  on  the  Utilization  of  Fishery  Resources,  Working  Paper  No.  8, 
Division  of  Economic  Research,  Bureau  of  Coimnercial  Fisheries,  College 
Park,  Maryland,  February  1969. 

183 


Sugiri,  G.  K.  A.,  "A  Description  of  the  Tortugas  Shrimp  Fisliery  and  ii.s 
Maximum  Sustainable  Yield,"  Master's  Thesis,  University  of  Miami,  Coral 
Gables,  Florida,  January  1971. 

Turrey,  Ralph,  "Optimization  and  Suboptimization  in  Fishery  Regulation," 
The  American  Economic  Review,  Vol,  LIV,  March  1964,  pp.  6A-76. 

Turrey,  Ralph  and  Jack  Wiseman,  The  Economics  of  Fisheries,  Food  and 
Agriculture  Organization  of  the  United  Nations,  Rome,  1957. 

Zellner,  A.,  "On  Some  Aspects  of  Fishery  Conservation  Prob]  ei.is ," 
reprinted  from  the  bulletin  of  the  International  Statistical  Institute, 
Vol.  XXXVIII,  Part  III,  Tokyo,  1961. 


BIOGRAPHICAL  SKETCH 

Paul  Jerome  Hooker  was  born  on  August  29,  1943,  at  Homestead, 
Florida.   In  August,  1960,  he  was  graduated  from  North  Marion  High 
School,  Reddick,  Florida.   In  August,  1966,  he  received  the  degree  of 
Bachelor  of  Science  V7ith  a  laajor  in  zoolog}'  from  the  UnJ.vcrsiLy  of 
Florida.   During  the  1966-67  school  year,  he  taught  biology  and 
chemistry  at  North  Marion  High  School.   In  1966  he  enrolled  in  the 
Graduate  School  of  the  University  of  Florida.   From  August,  1967,  to 
December,  1971,  he  has  held  an  NDEA  Title  IV  fellowship,  worked  for 
two  quarters  as  a  teaching  assistant,  and  has  been  employed  as  a 
graduate  reseat ch  a^'sociate  in  the  Department  of  Food  and  Pvcsource 
Economics  v.'hile  pursuing  the  degree  of  Doctor  of  Philosophy.   He  is 
currently  employed  as  Iviterim  Assistant  Professor  of  Food  and  Resource 
Economics  with  the  University  of  Florida  on  assignment  to  the  Ministry 
of  Agriculture  of  Guyana. 

Paul  Jerome  Hooker  is  married  to  the  former  Martha  Jean  Yongue, 
and  is  the  father  of  one  child.   He  is  a  member  of  Gamma  Sigma  Delta, 
Omicron  Delta  Epsilon,  and  the  American  Agricultural  Econom.ics 
Association. 


185 


I  certify  that  I  have  read  this  study  and  that  in  my  opinion  it 
conforms  to  acceptable  standards  of  scholarly  presentation  and  is  Cully 
adequate,  in  scope  and  quality,  as  a  dissertation  lor  the  degree  of 
Doctor  of  Philosophy. 


:'olopo.'-!'  ■ ,  Lh^r!.i,on 
Professor  of  Food  and  Resource 
Economics 


I  certify  that  I  have  read  this  study  and  that  in  my  opinion  it 
forms  to  acceptable  standards  of  scholarly  presentation  and  is  fully 


conf 

adequate,  in  scope  and  quality,  as  a 

Doctor  of  Philosophy. 


dissertation  for  the  degree  of 


jr. 


Max 'R.  Laagiiauij  Professo 
Food  and  Resource  Economics 


I  certify  that  I  have  read  this  study  and  that  in  my  opinion  it 
conforms  to  acceptable  standards  of  scholarly  presentation  and  is  fully 
adequate,  in  scope  and  quality,  as  a  dissertation  for  the  degree  of 
Doctor  oi  Philosophy. 


W.  VJ.  McPherson,  Professor 
Food  and  Resource  Economics 


I  certify  that  I  have  read  this  study  and  that  in  my  opinion  it 
conforms  to  acceptable  standards  of  scholarly  presentation  and  is  fully 
adequate,  in  scope  and  quality,  as  a  dissertation  for  the  degree  of 
Doctor  of  Philosophy. 


Carter  C.  Osterbind 
Professor  of  Economics 


This  dissertation  was  submitted  to  the  Baaii  of  the  College  of  Agriculture 
and  to  the  Graduate  Council,  and  was  accepted  as  partial  fulfillment  of 
the  requirements  for  the  degree  of  Doctor  of  Philosophy. 


March,  1972 


D;';::n,  Graduate  School 


9 

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