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The Effects of ITQ Management on Fishermen’s Welfare When the Processing Sector is Imperfectly Competitive

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  • David M. McEvoy

    () (Department of Resource Economics, University of Massachusetts Amherst)

  • Sylvia Brandt

    ()

  • Nathalie Lavoie

    () (Department of Resource Economics, University of Massachusetts Amherst)

  • Sven Anders

    () (Department of Rural Economy, University of Alberta Edmonton)

Abstract

In this paper we use a general model of imperfect competition to predict welfare changes within an open-access fishery transitioning to individual transferable quota (ITQ) management. Although related research has explored the effects of market power in the harvesting sector on ITQ performance, none have considered the implications of an imperfectly competitive processing sector. This study addresses this question specifically in the context of the Atlantic herring fishery, although its implications are relevant to all fisheries with similar industry structure. Our results show that ITQs could have a negative impact on fishermen’s welfare when processors have market power and the cap on aggregate harvest is binding or becomes binding with the implementation of ITQs.

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Bibliographic Info

Paper provided by University of Massachusetts Amherst, Department of Resource Economics in its series Working Papers with number 2007-3.

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Length: 47 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:dre:wpaper:2007-3

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Web page: http://www.umass.edu/resec/
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Keywords: ITQ; imperfect competition; welfare analysis; fisheries;

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  1. Richard J. Sexton & Mingxia Zhang, 1996. "A Model of Price Determination for Fresh Produce with Application to California Iceberg Lettuce," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 924-934.
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  3. Squires, Dale & Grafton, R. Quentin & Alam, Mohammed Ferdous & Omar, Ishak Haji, 2003. "Technical efficiency in the Malaysian gill net artisanal fishery," Environment and Development Economics, Cambridge University Press, vol. 8(03), pages 481-504, July.
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  9. Brandt, Sylvia & McEvoy, David, 2006. "Distributional effects of property rights: Transitions in the Atlantic Herring fishery," Marine Policy, Elsevier, vol. 30(6), pages 659-670, November.
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  12. Shu-Yu Huang & Richard J. Sexton, 1996. "Measuring Returns to an Innovation in an Imperfectly Competitive Market: Application to Mechanical Harvesting of Processing Tomatoes in Taiwan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 558-571.
  13. Acheson, James M, 1985. "The Maine Lobster Market: Between Market and Hierarchy," Journal of Law, Economics and Organization, Oxford University Press, vol. 1(2), pages 385-98, Fall.
  14. Boyce, John R., 2004. "Instrument choice in a fishery," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 183-206, January.
  15. Richard J. Sexton, 2000. "Industrialization and Consolidation in the U.S. Food Sector: Implications for Competition and Welfare," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1087-1104.
  16. Homans, Frances R. & Wilen, James E., 2005. "Markets and rent dissipation in regulated open access fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 381-404, March.
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