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Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management

  • Terry Anderson


    (PERC, Bozeman Montana Hoover Institution, Bozeman, Montana 59718)

  • Ragnar Arnason


    (Department of Economics, University of Iceland, 101 Reykjavik, Iceland)

  • Gary D. Libecap


    (Bren School of Environmental Science and Management, University of California, Santa Barbara, California 93106
    National Bureau of Economic Research, Cambridge, Massachusetts 02138)

Registered author(s):

    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.

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    Article provided by Annual Reviews in its journal Annual Review of Resource Economics.

    Volume (Year): 3 (2011)
    Issue (Month): 1 (October)
    Pages: 159-179

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    Handle: RePEc:anr:reseco:v:3:y:2011:p:159-179
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