Location Choice Behavior of Gulf of Mexico Shrimpers under Dynamic Economic Conditions

By Ran, Tao; Keithly, Walter R. et al. | Journal of Agricultural and Applied Economics, February 2011 | Go to article overview

Location Choice Behavior of Gulf of Mexico Shrimpers under Dynamic Economic Conditions


Ran, Tao, Keithly, Walter R., Kazmierczak, Richard F., Journal of Agricultural and Applied Economics


This study uses a mixed logit model to analyze monetary and nonmonetary factors that influence location choice behavior of the U.S. Gulf of Mexico shrimpers. Shrimpers' responses to economic conditions are compared and contrasted for two periods related to changing economic conditions in the industry. Results show that even though shrimpers are generally revenue driven in choosing a fishing site, their past experience also plays an important role. Further, changes in economic conditions appear to exhibit an influence on the risk attitudes of some shrimpers.

Key Words: location choice, loyalty, mixed Logit, risk averse, shrimp fishery

JEL Classifications: Q2, L2

Location choice is one of the most important short-run decisions confronting commercial fishermen. Fishermen's site selection behavior is influenced by an array of considerations including monetary (e.g., initial wealth, expected revenue, and costs) and nonmonetary (e.g., uncertainties and past experiences) factors (Anderson, 1982; Bockstael and Opaluch, 1983; Breffle and Morey, 2000; Dupont, 1993; Holland and Sutinen, 2000; Mistiaen and Strand, 2000; Smith, 2005; Smith and Wilen, 2005). While those factors are expected to influence shrimpers' location choice behavior, the magnitude of the impact associated with any specific factor is likely to vary in association with macro-economic conditions in that fishery.

The purpose of this paper is to develop, based on discrete choice theory, an analysis of shrimpers' location choice behavior and changes therein under deteriorating economic conditions. To do so, a mixed logit model is used in the analysis. Compared with the previous literature which considers only the heterogeneous preferences of fishers (such as Mistiaen and Strand, 2000), or only the effect of past experience (such as Holland and Sutinen, 2000), this study considers both aspects. While Smith (2005) incorporated true state dependence into a mixed logit model with emphasis on the modeling aspect, this study includes a more complete suite of factors to help explain location choice behavior by the Gulf of Mexico shrimp fleet. Further, to examine the dynamics of shrimpers' responses to economic changes, two time periods are considered. The earlier period, which covers the 5 years ending in 1999, corresponds to a relatively stable economic environment in the fishery. The later period, extending from 2000 through 2004, is associated with rapidly deteriorating economic conditions in the fishery. Differences in various parameter estimates between the two periods are examined, and the economic implications of the differences are discussed. The development and empirical testing of this model helps in assessing and forecasting shrimpers' spatial behavior, and has the potential to lead to more effective management of the Gulf of Mexico shrimp fishery.

To accomplish these objectives, the paper proceeds as follows. A brief description of the Gulf of Mexico shrimp harvesting sector is first presented, followed by a review of the pertinent literature and an illustration of the conceptual model. Attention is then turned to the discussion of the data sources and explanatory variables used in the analysis. Following the presentation of relevant results, policy implications from the model are briefly considered.

The Industry

The shrimp industry is the largest income generator among the Gulf of Mexico commercial fisheries. In general terms, the shrimp harvesting fleet is comprised of an inshore component and an offshore component. The inshore component consists of several thousand "smaller" boats and vessels (i.e., generally less than 60 feet in length) with limited mobility, and thus many consistently fish only a very limited geographical area. The offshore component is primarily comprised of larger vessels, generally in excess of 60 feet, that are considerably more mobile than the inshore fleet. This added mobility allows the offshore fleet to follow the migration patterns of shrimp (i. …

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Location Choice Behavior of Gulf of Mexico Shrimpers under Dynamic Economic Conditions
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