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Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management

Author

Listed:
  • Gary. D. Libecap
  • Terry Anderson
  • Ragnar Arnason

Abstract

We show that grandfathering fishing rights to local users or recognizing first possessions is more dynamically efficient than auctions of such rights. It is often argued that auctions allocate rights to the highest-valued users and thereby maximize resource rents. We counter that rents are not fixed in situ, but rather depend additionally upon the innovation, investment, and collective actions of fishers, who discover and enhance stocks and convert them into valuable goods and services. Our analysis shows how grandfathering increases rents by raising expected rates of return for investment, lowering the cost of capital, and providing incentives for collective action.

Suggested Citation

  • Gary. D. Libecap & Terry Anderson & Ragnar Arnason, 2010. "Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management," ICER Working Papers 31-2010, ICER - International Centre for Economic Research.
    • Handle: RePEc:icr:wpicer:31-2010
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    File URL: http://www.biblioecon.unito.it/biblioservizi/RePEc/icr/wp2010/ICERwp31-10.pdf
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    More about this item

    Keywords

    Fishing rights; property rights; allocating fishing rights; grandfathering fishing rights; auctions of fishing rights; fisheries rent;
    All these keywords.

    JEL classification:

    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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