Technical Efficiency Effects of Input Controls: Evidence from Australia’s Banana Prawn Fishery

Using two unbalanced panel data sets of vessels over the periods 1990-1996 and 19942000 the paper estimates stochastic production frontiers and evaluates the effects on individual technical efficiency of inputs controls in the northern banana prawn fishery of Australia. The results indicate that technical efficiency is decreasing in the gear input headrope length that was restricted until 1993 and increasing in A-units, a measure of vessel size and engine capacity that was used to regulate the fishery from 1985 to 2001. Technical efficiency is also shown to decline over the periods 1990-1996 and 19942000 that coincides with increasing restrictions on A-units and a government-funded buy-back of A-units. The study provides strong evidence that input controls reduced average technical efficiency in the fishery.