FISHERY BULLETIN: VOL. 86, NO. 2 



gear, the number of vessels may be used to indi- 

 cate the stock of capital and investment. How- 

 ever, Kendrick (1961) demonstrated that the total 

 number of operating units, such as the number of 

 plants, is an inadequate measure of capital stock. 

 Also, few fleets have identical-sized vessels, char- 

 acteristics, or gear. As a consequence, the number 

 of vessels does not provide adequate information 

 to indicate the level of capitalization and invest- 

 ment. 



This study presents an approach for estimating 

 the aggregate or industry level of capital stock 

 and investment in a fishery comprised of hetero- 

 geneous vessels using available information. 

 Data available include acquisition and list prices 

 for some but not all vessels and boat characteris- 

 tics for all vessels in a fleet. The approach was 

 developed and used to obtain estimates of capital 

 stock in support of the United States and Cana- 

 dian maritime boundary dispute. It is viewed as 

 an initial step towards examining the problems of 

 excess capitalization by providing estimates of 

 aggregate capital stock and investment. 



THE DEFINITION AND MEASUREMENT 

 OF CAPITAL AND INVESTMENT 



Capital 



The concept of capital has created problems for 

 economists for quite some time. The term has 

 been used in so many different contexts that it is 

 a source of enormous confusion (Hirshleifer 

 1970). Sloan and Zurcher (1968), in their 

 "Dictionary of Economics", define capital as "One 

 of the major factors of production consisting of 

 property from which an income is derived, ex- 

 pressed in terms of money. Popularly, the term is 

 frequently used interchangeably with capital 

 good. A distinction is sometimes made between 

 money capital, or that part of the capital held in 

 the form of money and bank deposits, and prop- 

 erty capital, or that part of the capital held in the 

 form of evidences of ownership such as stocks, 

 bonds, and mortages." 



Hirshleifer (1970) presented three meanings of 

 capital: 1) real capital or capital stock, 2) capital 

 value, and 3) liquid capital. Real capital is de- 

 fined as a collection of capital goods or an aggre- 

 gate of heterogeneous capital inputs. It is one of 

 the major productive commodities or economic 

 factors of production. Capital value is the net dis- 

 counted value of expected future income streams 

 associated with a capital good. Liquid capital is 



the level of current funds available or intended 

 for investment. 



In the case of fisheries, real capital or capital 

 stock is the form of capital which should be exam- 

 ined with respect to the problems of overcapital- 

 ization and excess harvesting capacity. It is the 

 relevant measure of capital goods used or avail- 

 able for production (National Academy of Sci- 

 ences 1979). Moreover, capital stock is the con- 

 cept of capital used to define and measure the 

 services of capital inputs which are required to 

 harvest fish; that is, it is the concept of capital 

 required to define the economic production tech- 

 nology of a fishery. Thus, this study is concerned 

 with the concept of real capital stock. ^ 



The measurement of capital stock in a fishery, 

 however, presents several problems. First, capital 

 inputs are usually quite heterogeneous and can- 

 not be easily aggregated without restrictive as- 

 sumptions about the form of the catch equation or 

 fishermen's behavior. Conceptually, it should be 

 possible to combine all the different types of capi- 

 tal goods by weighting each type by its average 

 compensation (i.e., the rental price). However, in- 

 formation at this level of detail is typically not 

 available. Second, fisheries agencies, particularly 

 in the United States, generally do not collect and 

 compile information necessary to calculate capi- 

 tal stock and investment. Third, in order to com- 

 pare changes in capital stock over time, the meas- 

 ure of capital stock must be converted to some 

 base period value by deflation. 



In empirical economic studies of traditional in- 

 dustries, the common practice is to measure the 

 capital input or stock by converting the purchase 

 or acquisition price or the book values of capital to 

 base period values by the use of a price index 

 (National Academy of Sciences 1979). Varian 

 (1984) noted: "The usual procedure is to measure 

 capital value and then deflate by a price index; in 

 some sense, this should measure the level of cap- 

 ital stock." In this study, the acquisition price is 

 used as the measure of the stock of capital or 

 capital value; the real stock of capital is obtained 

 by dividing the capital value by the producer 

 price index for heavy machinery. 



Investment 



The definition and measurement of investment 

 is more straightforward than is the definition and 



5The market value of capital, acquisition price, and cost of 

 capital are used interchangeably in this study. 



340 



