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On Efficiency of Individual Transferable Quotas (ITQs) through Reduction of Vessels

Author

Listed:
  • Keisaku Higashida

    (School of Economics, Kwansei Gakuin University)

  • Yasuhiro Takarada

    (Faculty of Policy Studies, Nanzan University)

Abstract

This paper theoretically examines whether an individual transferable quotas (ITQs) regime can achieve the long-run efficiency through the reduction of vessel numbers. Assuming the existence of two types of vessels in terms of their scales, we consider not only quota transactions but also the exit of fishers. Changes in vessel sizes of incumbent fishers are also taken into consideration. We find that when large-scale vessels are more efficient than small-scale vessels, the long-run efficiency is achieved only with an ITQ regime. However, when small-scale vessels are more efficient than large-scale vessels, the long-run efficiency is not achieved; the number of vessels becomes too few compared to when the total harvesting cost is minimized.

Suggested Citation

  • Keisaku Higashida & Yasuhiro Takarada, 2011. "On Efficiency of Individual Transferable Quotas (ITQs) through Reduction of Vessels," Discussion Paper Series 68, School of Economics, Kwansei Gakuin University, revised Jan 2011.
    • Handle: RePEc:kgu:wpaper:68
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    References listed on IDEAS

    as
    1. Claire Armstrong, 2008. "Using history dependence to design a dynamic tradeable quota system under market imperfections," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(4), pages 447-457, April.
    2. Newell, Richard G. & Sanchirico, James N. & Kerr, Suzi, 2005. "Fishing quota markets," Journal of Environmental Economics and Management, Elsevier, vol. 49(3), pages 437-462, May.
    3. Quinn Weninger, 2008. "Economic Benefits of Management Reform in the Gulf of Mexico Grouper Fishery: A Semi-parametric Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(4), pages 479-497, December.
    4. Anderson, Lee G., 1991. "A note on market power in ITQ fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 21(3), pages 291-296, November.
    5. Quinn Weninger & Richard E. Just, 2002. "Firm Dynamics with Tradable Output Permits," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 572-584.
    6. Quinn Weninger, 1998. "Assessing Efficiency Gains from Individual Transferable Quotas: An Application to the Mid-Atlantic Surf Clam and Ocean Quahog Fishery," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 750-764.
    7. Lian, Carl, 2010. "Fleet Restructuring, Rent Generation and the Design of Individual Transferable Fishing Quota Programs: Empirical Evidence from the Pacific Coast Groundfish Fishery," Staff General Research Papers Archive 31422, Iowa State University, Department of Economics.
    8. Lian, Carl & Singh, Rajesh & Weninger, Quinn, 2010. "Fleet Restructuring, Rent Generation, and the Design of Fishing Quota Programs: Empirical Evidence from the Pacific Coast Groundfish Fishery," Staff General Research Papers Archive 31428, Iowa State University, Department of Economics.
    9. Brandt, Sylvia, 2007. "Evaluating tradable property rights for natural resources: The role of strategic entry and exit," Journal of Economic Behavior & Organization, Elsevier, vol. 63(1), pages 158-176, May.
    10. Jesper Levring Andersen & Peter Bogetoft, 2007. "Gains from quota trade: theoretical models and an application to the Danish fishery," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 34(1), pages 105-127, March.
    11. Spulber, Daniel F., 1985. "Effluent regulation and long-run optimality," Journal of Environmental Economics and Management, Elsevier, vol. 12(2), pages 103-116, June.
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    Cited by:

    1. Okumura, Yasunori, 2016. "Individual transferable quotas in Cournot competition," Economic Modelling, Elsevier, vol. 55(C), pages 315-321.
    2. Bertolotti, María Isabel & Rotta, Lautaro Daniel & Baltar, Fabiola & Gualdoni, Patricia & Pagani, Andrea N., 2015. "Cuotas Individuales Transferibles de Captura en Argentina: política y desempeño," Nülan. Deposited Documents 3113, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    3. Stefano Mainardi, 2021. "Parametric and Semiparametric Efficiency Frontiers in Fishery Analysis: Overview and Case Study on the Falkland Islands," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(2), pages 169-210, June.

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    More about this item

    Keywords

    Efficient fishery; fishery management; individual transferable quotas; quota transaction; vessel scale.;
    All these keywords.

    JEL classification:

    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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