An Econometric Model for American Lobster

Abstract

An econometric model for the wholesale and ex-vessel markets of American lobster, Homarus amedcanus, was developed to determine the market impact of proposed increases in the minimum size for American lobster. Prices were found to be inflexible with respect to landing, imports, and income (i.e., the price flexibilities were less than one) in both wholesale and ex-vessel markets. The size of lobster has a statistically significant effect on wholesale and ex-vessel prices and revenues. On average, wholesalers pass along 52% of any price changes to lobstermen. The ex-vessel price impact of a given change in supply is about the same as for changes in either landings or imports. Any changes in public policies leading to increases in total landings of American lobster and/or decreases in the proportion of small lobsters in the landings would result in increases in gross revenues to fishermen and wholesalers. While the long-term impact would be favorable, the short-term market impact of increases in the minimum size for lobster would be uncertain.Demand and Price Analysis, Environmental Economics and Policy, Resource /Energy Economics and Policy,