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The Opportunity Cost of Capital and Optimal Vessel Size in the Norwegian Fishing Fleet

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  • Trond Bjørndal
  • Daniel V. Gordon

Abstract

We test for optimal vessel size in the Norwegian fishing fleet using cross-section data for the period 1969-73. With the prevailing interest rate defined as the opportunity cost of capital, the Conrad-Unger conditions for static optimality in vessel size are rejected for each year. However, using alternative values of the opportunity cost of capital, existing vessel size is shown to be near optimal. We conclude that individual transferable catch quotas could be introduced to regulate the fishery allowing for efficient harvesting but imposing minimal restrictions on vessel size.

Suggested Citation

  • Trond Bjørndal & Daniel V. Gordon, 1993. "The Opportunity Cost of Capital and Optimal Vessel Size in the Norwegian Fishing Fleet," Land Economics, University of Wisconsin Press, vol. 69(1), pages 98-107.
    • Handle: RePEc:uwp:landec:v:69:y:1993:i:1:p:98-107
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    Cited by:

    1. Itziar Lazkano, 2008. "Cost Structure and Capacity Utilisation in Multi-product Industries: An Application to the Basque Trawl Industry," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(2), pages 189-207, October.
    2. Reinoud Joosten, 2011. "Social Dilemmas, Time Preferences and Technology Adoption in a Commons Problem," Papers on Economics and Evolution 2011-09, Philipps University Marburg, Department of Geography.
    3. Frank Asche & Trond Bjørndal & Daniel V. Gordon, 2009. "Resource Rent in Individual Quota Fisheries," Land Economics, University of Wisconsin Press, vol. 85(2), pages 279-291.
    4. Frank Asche & Daniel V. Gordon & Carsten L. Jensen, 2007. "Individual Vessel Quotas and Increased Fishing Pressure on Unregulated Species," Land Economics, University of Wisconsin Press, vol. 83(1), pages 41-49.
    5. Asche, Frank & Bjørndal, Marianne Tranberg & Bjørndal, Trond, 2014. "Development in fleet fishing capacity in rights based fisheries," Marine Policy, Elsevier, vol. 44(C), pages 166-171.
    6. Nicolas Sanz & Bassirou Diop & Fabian Blanchard & Luis Lampert, 2017. "On the influence of environmental factors on harvest: the French Guiana shrimp fishery paradox," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(2), pages 233-247, April.
    7. Carsten Lynge Jensen, 2000. "Output Substitution in a Regulated Fishery," Working Papers 7/00, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.

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