temperature.^' The regression estimates yielded the 

 following results: 



X = -31.2094 - .000039617" + 1.89392 (°F) (23) 

 (10.23) (4.63) 



R- = 0.82 



D-W = 1 .023 



where T = 562.8 (K), d = 12.5468. c =-31.2094. In 

 (23), T is equal to the number of traps fished per year 

 and /-ratios are in parentheses. Both T and °F are 

 statistically significant at the 5 percent level and ex- 

 hibit the correct sign; the Durbin-Watson statistic in- 

 dicates no significant autocorrelation. 



The only step required to obtain the biotechnologi- 

 cal parameters is an estimate of the biomass (Xa) con- 

 sistent with maximum sustainable yield. It has been 

 calculated that (assuming a temperature of 48°F) the 

 fishable stock of Maine inshore lobster consistent with 

 maximum sustainable yield is equal to 21.8 million 

 pounds. 



Finally, on the basis of recent cost studies, we have 

 derived an estimate of 77 for 1966 equal to $12,070.^® 

 Therefore, on the supply side, the estimated parame- 

 ters for 1969 are the following: 



a = 2.06832, 

 h = 4.75476 X 10-«, 

 r = 7.72379 x 10-^ 

 ^ =$13,191 (see footnote 26). 



B. The Demand Function for American Lobsters. 



Only knowledge of d and B is needed in order to 

 complete the empirical component of the study. The 



-^Forany particular year, we may obtain equation (16) if we know 

 the number of traps used per vessel or TIK. Hence, we may easily 

 go from traps (i.e., fishing effort) to vessels, in which the model is 

 specified. The relationship for 1966, derived on the basis of cost data 

 obtained from the National Marine Fisheries Service's Division of 

 Financial Assistance (1969), was 562.8 traps per full time equivalent 

 American lobster boat. 



^^Cost data from the National Marine Fisheries Service's Divi- 

 sion of Financial Assistance (1966) reveal the following cost break- 

 down for a representative lobster boat: operating expenses, 

 $4,965.16; fixed expenses, $1,180.20; returns to capital and labor, 

 $5,825.48. This gives a total of $12,070.84. The latter figure was 

 updated to 1969 by income increases in Maine to obtain $13,191. 



estimation procedure is rather straightforward. We 

 may specify the following demand function for all lob- 

 sters: 



^ = F - m{P'IC?\) + fi(YIN), (24) 



N 



where C is equal to consumption of all lobsters, P' is 

 the money ex-vessel price of American lobsters, Y is 

 aggregate U.S. personal income (1967 prices), N is 

 U.S. population, and CPl is the consumer price 

 index. Since there are no exports of lobster, the fol- 

 lowing identity holds: 



C = / + Co + Q,„ 



(25) 



where/, Qo, and gin are the level of imported lobsters, 

 U.S. production of all other lobsters, and U.S. pro- 

 duction of inshore northern lobsters, respectively. 

 Given (25), equation (24) may be solved in terms of P, 

 or. 



P' 

 CPI 



[ 



1 



mN 



(e,„ + Qo + /)+^] 



(26) 



If go, /, Y, CPI, and N are held constant, equation 

 (26) gives a unique relationship between the ex-vessel 

 price of American lobsters and quantity landed. 



Using data over the 1950-1969 period, the parame- 

 ters of equation (24) were estimated using least-squares: 



C 



N 



^= -.0632 - .005029 ( 



_^)+.00051(^) (27) 



(2.06) 



(5.38) 



R' =0.816 

 D-W = 0.619 



All of the independent variables are significant at the 

 0.05 level. However, the Durbin-Watson statistic in- 

 dicates the strong possibility of positive autocorrela- 

 tion. Nonetheless, we will use these estimates as 

 rough approximations to obtain the price-dependent 

 relationship as shown in (26). Given 1969 values of 

 exogenous variables (N = 199,100,000; Y = $567,635 

 million; CPI = 109.8 with a base of 1967 = 100; 

 Qo + I = 164.7 million pounds) we have, 



P = 1.12 (0.99853 X 10-8)ein- (28) 



Thus initial values for a (1.12) and 6(0.99853 x lO'*) 

 have been obtained. 



41 



