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Trading Frictions and Fishery Discards

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  • Singh, Rajesh
  • Weninger, Quinn

Abstract

We study harvest uncertainty in a fishery that is managed with tradable quotas. We show that eliminating trading frictions in quota markets can eliminate at-sea discards that occur due to random catch-quota imbalance. In general,discards and the cost of harvesting a fixed quota increases with trading costs. As an alternative, when trading costs are unavoidable, we deduce an ad-valorem tax/subsidy that can eliminate discards while delivering a desired harvest target. These results have important implications for quota program designs, which often limit quota trades to address ancillary management objectives.

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File URL: http://www.econ.iastate.edu/sites/default/files/publications/papers/p15039-2012-04-03.pdf
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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 35039.

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Date of creation: 03 Apr 2012
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Handle: RePEc:isu:genres:35039

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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Keywords: Trading frictions; discards; harvest uncertainty; individual transferable fishing quotas;

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References

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  1. Boyce, John R., 1996. "An Economic Analysis of the Fisheries Bycatch Problem," Journal of Environmental Economics and Management, Elsevier, vol. 31(3), pages 314-336, November.
  2. Squires, Dale, 1987. "Fishing effort: Its testing, specification, and internal structure in fisheries economics and management," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 268-282, September.
  3. Neary, J.P & Roberts, K.W.S, 1978. "The Theory of Household Behaviour under Rationing," The Warwick Economics Research Paper Series (TWERPS) 132, University of Warwick, Department of Economics.
  4. Vestergaard, Niels, 1996. "Discard Behavior, Highgrading And Regulation: The Case Of The Greenland Shrimp Fishery," Marine Resource Economics, Marine Resources Foundation, vol. 11(4).
  5. Herrera, Guillermo E., 2005. "Stochastic bycatch, informational asymmetry, and discarding," Journal of Environmental Economics and Management, Elsevier, vol. 49(3), pages 463-483, May.
  6. Stavins Robert N., 1995. "Transaction Costs and Tradeable Permits," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 133-148, September.
  7. Hatcher, Aaron, 2005. "On the Microeconomics of Quota Management in Fisheries," Marine Resource Economics, Marine Resources Foundation, vol. 20(1).
  8. Holland, D.S., 2010. "Markets, pooling and insurance for managing bycatch in fisheries," Ecological Economics, Elsevier, vol. 70(1), pages 121-133, November.
  9. Sanchirico, James N. & Holland, Daniel & Quigley, Kathryn & Fina, Mark, 2006. "Catch-quota balancing in multispecies individual fishing quotas," Marine Policy, Elsevier, vol. 30(6), pages 767-785, November.
  10. Squires, Dale & Campbell, Harry & Cunningham, Stephen & Dewees, Christopher & Grafton, R Quentin & Herrick, Samuel F & Kirkley, James & Pascoe, Sean & Salvanes, Kjell & Shallard, Bruce & Turris, Bruce, 1998. "Individual transferable quotas in multispecies fisheries," Marine Policy, Elsevier, vol. 22(2), pages 135-159, March.
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Cited by:
  1. Singh, Rajesh & Weninger, Quinn, 2012. "Harvesting uncertainty and discards in multiple-species fisheries," Staff General Research Papers 35428, Iowa State University, Department of Economics.

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