Analyzing the cost of harvesting and the economic structure of Florida grouper fishery

This study uses a translog cost function to investigate the technical and economic relationships present among a sample of Florida grouper longline vessels. The existence of jointness-in-inputs and non-separability between inputs and outputs suggests that resource management should be based on multiproduct production theory, and that explicit recognition of the economic interactions among species should be incorporated in any regulatory process. The cross-price elasticities of input demands showed substitution relationships between input pairs, implying that imposed regulation on the single input will be compensated for by increases in the other inputs. Furthermore, model results showed apparently substantial economies of scope, especially between red grouper and most of the other species in the grouper fishery, product specific economies of scale and multiproduct economies of scale. The technical and economic interrelationships inferred from this study suggest that individual species regulation can generate economic inefficiency by inducing nonoptimal input and output mixes