The Day-to-day Supply Responses of a Limited-entry Mixed Fishery

Abstract

Small-scale fishers’ short-run supply decisions are understudied, often because of data limitations. We utilize a unique dataset of daily catches and prices from a mixed-species trawl fishery in Taiwan, characterized by targeting decisions made before prices are formed. To investigate the effect of expected prices on fishers’ supply decisions, we formulate a vector error correction model in a seemingly unrelated regression system of 11 fish species. We find a price-elastic short-run supply for several species: the maximum daily price elasticity of supply (PES) ranges from 0.4 to 1.1 and is statistically significant for all but one species. The long-run PES (approx. weekly) is >1 for eight species. In contrast, elasticity with respect to wave height is weak (the median short-run elasticity is −0.4). These findings are unexpected for trawl fisheries, which are believed to have low selectivity. Our results highlight the potential that auction markets have to incentivize fishing that emphasizes quality over quantity.