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Economics & Social Sciences Research Program

Preliminary Alaska Fishery CGE Model Developed

After completing a supply-determined social accounting matrix (SDSAM) model, an import-ridden social accounting matrix (SAM) was prepared to develop an Alaska fishery computable general equilibrium (CGE) model. The development of the CGE model was a result of dissatisfaction with fixed-price models such as input-output (IO) and SAM models.

The fixed-price models have several important limitations. In these models, prices are assumed to be fixed, and no substitution is allowed between factors in production or commodities in consumption. As a result, in cases where the fixed-price assumption may not be realistic, these models tend to overestimate impacts.

CGE models overcome these limitations. In CGE models, prices are allowed to vary, triggering substitution effects in production and consumption. The CGE models, therefore, enable analysts to easily examine the economic welfare implications of a policy change. Furthermore, the CGE approach is generally more appropriate than other regional economic models for analyzing the impacts of a change in productive capacity of resource-based industries.

In the Alaska CGE model, both the "use" and "make" matrices are specified in the model. Therefore, a harvesting sector produces multiple commodities (i.e., species). The model has 22 industries, 8 of which are harvesting and processing industries, and 28 commodities. Currently, the model is being refined.

Once the final version of the model is prepared, it will be used to simulate the distribution and magnitude of economic impacts associated with harvesting, processing, and support activities related to Alaska fisheries.

By Chang Seung and Edward Waters


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