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Harvesting Preemption, Industrial Concentration and Enclosure of National Marine Fisheries

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  • Julio Peñ-Torres

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    Abstract

    This paper explores how harvesting technology can affect firms' internalisation of common pool externalities and the incentives for expanding firm's size. Focusing on supply side non-pecuniary externalities, our closed-entry harvesting competition model suggests that when marginal harvesting costs are weakly sensitive to common pool externalities, atomistic competition is likely to remain, other things equal, as the predominant industrial structure in the fishery. The avenue for increasing industrial concentration is modelled via Stackelberg leadership which offers the option of preempting rivals' production. In our static modelling, a fishery subject to Stackelberg signalling results in higher overfishing versus the case of a highly decentralised harvesting sector (proxied by the use of Nash conjectures). Given that static optimising behaviour could be interpreted as a result of entry controls and other fishing regulations being widely perceived as ineffective controls, the obtained overfishing ranking suggests that in fisheries where strategic preemption in production is feasible, but where entry controls and other important regulations on fishing effort are considered to be ineffective, overfishing is likely to remain the predominant outcome, even if other incentives promote evolution towards a more concentrated industry structure. When the fishery is already overpopulated by numerous small firms, whatever advantages large firms may have in terms of profitability, numerous small-scale fishermen tend to make up for in the political arena. This imposes constraints on the politically feasible fishing regulations. We use a second best welfare benchmark to illustrate resulting policy trade-offs. Copyright Kluwer Academic Publishers 1999

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    Bibliographic Info

    Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

    Volume (Year): 14 (1999)
    Issue (Month): 4 (December)
    Pages: 545-571

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    Handle: RePEc:kap:enreec:v:14:y:1999:i:4:p:545-571

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    Web page: http://www.springerlink.com/link.asp?id=100263

    Related research

    Keywords: common property; enclosure of marine fisheries; overproduction; strategic preemption of rivals' production;

    References

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    1. Ralph E. Townsend, 1990. "Entry Restrictions in the Fishery: A Survey of the Evidence," Land Economics, University of Wisconsin Press, vol. 66(4), pages 359-378.
    2. Colin W. Clark & Gordon R. Munro, 1980. "Fisheries and the Processing Sector: Some Implications for Management Policy," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 603-616, Autumn.
    3. Cornes, Richard & Mason, Charles F & Sandler, Todd, 1986. "The Commons and the Optimal Number of Firms," The Quarterly Journal of Economics, MIT Press, vol. 101(3), pages 641-46, August.
    4. Cornes, Richard & Sandler, Todd, 1983. "On Commons and Tragedies," American Economic Review, American Economic Association, vol. 73(4), pages 787-92, September.
    5. Trond Bjørndal, 1989. "Production in a Schooling Fishery: The Case of the North Sea Herring Fishery," Land Economics, University of Wisconsin Press, vol. 65(1), pages 49-56.
    6. Dasgupta,P. S. & Heal,G. M., 1985. "Economic Theory and Exhaustible Resources," Cambridge Books, Cambridge University Press, number 9780521297615.
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    Cited by:
    1. Julio Peña-Torres, . "Individual Trandsferable Fishing Quotas in Chile: Recent History and Current Debates," ILADES-Georgetown University Working Papers inv139, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.

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