KIRKLEY AND SQUIRES: CAPITAL STOCK AND INVESTMENT IN A FISHERY 



Atlantic Fisheries and increased fuel prices be- 

 tween 1972 and 1975; 3) the formulation and im- 

 plementaiion of the Fisheries Conservation and 

 Management Act in 1976 and 1977; 4) extremely 

 restrictive regulations in 1978 and 1979; and 5) a 

 long dock strike in New Bedford, frozen harbors, 

 and foreign purchases from American fishermen 

 in 1981. In addition, there was substantial entry 

 of new steel-hulled vessels between 1975 and 

 1977 and 1979 and 1980. 



Chow (1960) tests of the equality of regression 

 equations were conducted to further examine the 

 possibility that the statistical relationships be- 

 tween cost and vessel characteristics changed 

 over time. The Chow test is an F-test of the stabil- 

 ity of the coefficients (Maddala 1977). The results 

 of these tests are presented in Table 3. 



The results of the tests indicate that the esti- 

 mated relationships between cost and character- 

 istics were not the same for the selected time peri- 

 ods. Alternatively, the hypothesis of the equality 

 of the regression equations for different periods of 

 time could not be accepted at any reasonable level 

 of significance. However, these results only verify 

 that different models should be estimated for dif- 



Table 3. — Results of tests for the equality of regression 

 equations. 



'F-statistIc for denominator degrees of freedom equal to infin- 

 ity. 



^Restricted residual sum of squares obtained by pooling data 

 over all time periods and estimating Equation (2). Unrestncted 

 residual sum of squares obtained by estimating Equation (2) for 

 each penod being examined and then adding the residual sum 

 of squares for each equation. 



^Residual sum of squares obtained from estimating Equation 

 (2) without the time vanable 



ferent periods of time. They are not conclusive 

 proof of the selection of the years for a particular 

 group of years. A more accurate determination of 

 the years to be included in each group requires 

 considerably more estimation and hypothesis 

 testing which is beyond the intent of this study. 



As indicated by the ^-statistics in Tables 1 and 

 2, the age of the vessel, whether or not the vessel 

 is new or used, and the size characteristics appear 

 to be the more statistically significant explana- 

 tory variables. These results are consistent with 

 the results of Griffin et al. (1978). The statisti- 

 cally significant negative coefficients for the size 

 characteristics during the years 1972-75 are par- 

 ticularly interesting. These years coincide with 

 the Arab oil embargo when fuel prices increased; 

 expected increases in future operational costs 

 may have deterred new entry. The results also 

 indicate that the value of a vessel declines as it 

 becomes older. The coefficient for hull construc- 

 tion, CS, suggest that steel-hulled vessels are 

 more expensive than are those of other materials 

 such as fiberglass, ferro cement, wood, and alu- 

 minum. There does not appear to be a difference 

 in the value of a vessel based on gear type. This 

 may be a result of specification problems with the 

 dummy variable for gear t)^e (see footnote 7). 



It is of further interest to examine the elastic- 

 ities of cost with respect to the vessel characteris- 

 tics. ^° These are presented in Table 4. As indi- 

 cated, vessel tonnage, length, and age have the 

 greatest influence on the acquisition price. The 

 elasticity for length is consistent with the manner 

 in which vessels are sold; that is, vessel prices are 

 largely stated in terms of their length. 



There are, however, inconsistences in the esti- 

 mated capital stock equations and elasticities. In 



'0 Elasticities indicate the p)ercentage change in cost result- 

 ing from a 1% change in the value of a characteristic. 



Table 4. — Estimated elasticities of cost with respect to 

 vessel characteristics.' 



' Elasticities based on nominal estimates and observed mean 

 values of cost and vessel charactenstlcs. 



2GRT is gross registered tonnage; HPWR is engine horse- 

 power; LN is lengtti; AGE is age ol vessel. 



345 



