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A laboratory assessment of the choice of vessel size under individual transferable quota regimes

Author

Listed:
  • Kenta Tanaka
  • Keisaku Higashida
  • Shunsuke Managi

Abstract

type="main" xml:id="ajar12064-abs-0001"> This paper examines the effect of individual transferable quota regimes on technology choice, such as choice of vessel size, by using the laboratory experiment method. We find that even if vessel sizes change over time, the quota price can converge to the fundamental value conditioned on the vessels chosen. We also find that subjects choose their vessel type to maximise their profits based on the quota trading prices in the previous period. This result implies that the efficiency of quota markets in the beginning period is important because any inefficiency in quota markets may affect vessel sizes in ensuing periods. Moreover, we find that the initial allocations may significantly influence vessel sizes through two channels: first, a higher initial allocation to a subject increases the likelihood that the subject invests in a large-sized vessel; second, the quota price may be higher and more unstable under unequal allocation than under equal allocation; thus, whether the allocation is equal influences subjects' choice of vessel type.

Suggested Citation

  • Kenta Tanaka & Keisaku Higashida & Shunsuke Managi, 2014. "A laboratory assessment of the choice of vessel size under individual transferable quota regimes," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), pages 353-373, July.
    • Handle: RePEc:bla:ajarec:v:58:y:2014:i:3:p:353-373
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    File URL: http://hdl.handle.net/10.1111/ajar.2014.58.issue-3
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    Cited by:

    1. Zafer Kanik & Serkan Kucuksenel, 2013. "The Promise of Transferable Fishing Concessions on EU Fisheries," ERC Working Papers 1312, ERC - Economic Research Center, Middle East Technical University, revised Dec 2013.
    2. Pueboobpaphan, Suthatip & Indra-Payoong, Nakorn & Opasanon, Sathaporn, 2019. "Experimental analysis of variable surcharge policy of taxi service auction," Transport Policy, Elsevier, vol. 76(C), pages 134-148.
    3. Kanik, Zafer & Kucuksenel, Serkan, 2014. "Transferable Fishing Concessions and EU Fisheries," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 183092, European Association of Agricultural Economists.
    4. Higashida, Keisaku & Tanaka, Kenta & Managi, Shunsuke, 2019. "The efficiency of conservation banking schemes with inter-regionally tradable credits and the role of mediators," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 175-186.
    5. Keisaku Higashida & Kenta Tanaka & Shunsuke Managi, 2024. "Who pays and who should pay for the uncertain conservation cost in biodiversity banking programs: evidence from a laboratory experiment," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(9), pages 22473-22498, September.

    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • 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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