Downward Adjustments in a Cyclical Environment: The Case of Chilean Pelagic Fisheries

This paper offers an empirical analysis of harvest functions for the two main Chilean pelagic fisheries, which are characterized by cyclical fish abundance. Two main results are obtained. First, we identify production-side effects that weaken the incentives to adjust towards lower fishing efforts: (i) increasing returns in the use of variable inputs are observed, which are strengthened by external economies associated to aggregate search effort for fish; and (ii) catch yields sensitive to changes in abundance, but where the strength of this effect decreases as abundance declines. Second, we confirm the empirical relevance of Translog harvest technologies. This contradicts a frequent practice in bio-economic models, i.e. considering harvest-input elasticities as being constant and independent from the scale of production.