Determinants of vessel efficiency and vertical/horizontal price transmissions in consumer markets are key elements for assessing the viability of a fishery, particularly for a small fishery-dependent economy. An open issue also concerns whether vesselefficiency levels influence export prices. The paper sets off with a review of evidence from other countries, followed by hypotheses for the Falkland Islands. To test these hypotheses, the analysis first applies a stochastic frontier model accounting for latent skipper skills, to a monthly 2008-2016 panel of fishing vessels operating in the Islands. Using estimated vessel inefficiency by licence type as a proxy indicator of product quality and extra costs of transhipment, the study moves on to examineprice adjustments of Falkland hake and other finfish sold at Spanish ports vis-a-vis two major south Atlantic hake supplier countries—Argentina and Namibia—and local traders. Lastly, based on full sample and rolling widow regressions on 2004-2016 monthly data, the analysis formulates and estimates threshold autoregressive models for the hake value chain in Spain, as the largest European port-of-entry and market for fresh and frozen hake, including from the Falklands. Once different output frontiers are accounted for, vessels with licences for hake as their main target do not outperform, in terms of technical efficiency, less-valued finfish vessels. Besides evidence of increasing integration within supplier and consumer markets, econometric results suggest some degree of price 'leadership' by Namibian hake exporters and asymmetric behaviour in short-run price adjustments by Spanish retailers. However, producer and consumer markets turn out to be weakly interlinked.
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