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Individual Transferable Quota Markets under Illegal Fishing

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  • Carlos Chavez

    ()

  • Hugo Salgado

Abstract

The use of individual transferable quotas in fisheries has been considered an opportunity to achieve a given total allowable catch with a maximum social benefit. One of the assumptions used in obtaining that result is that the system is in perfect compliance. The presence of violations and the need for enforcement of tradable property rights systems in fisheries has not received much attention in the literature. The incidents of non-compliance, however, may affect the performance of transferable property rights-based fisheries in unexplored ways. In this paper, we adapt previous literature on enforcing emissions trading programs to analyze a positive model of fisherman behavior that operates under a perfectly competitive individual transferable quota system, while recognizing the opportunities for violations of quota holdings, given incomplete enforcement. Considering a poorly enforced, individual transferable quota system we are able to obtain a number of implications for the current and future equilibrium of the quota market, the time paths of the fishery, and the proper design of a policy rule on total allowable catch (TAC). Copyright Springer 2005

Suggested Citation

  • Carlos Chavez & Hugo Salgado, 2005. "Individual Transferable Quota Markets under Illegal Fishing," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(3), pages 303-324, July.
  • Handle: RePEc:kap:enreec:v:31:y:2005:i:3:p:303-324
    DOI: 10.1007/s10640-005-1543-6
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    References listed on IDEAS

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    1. Parzival Copes, 1986. "A Critical Review of the Individual Quota as a Device in Fisheries Management," Land Economics, University of Wisconsin Press, vol. 62(3), pages 278-291.
    2. Stranlund, John K & Chavez, Carlos A, 2000. "Effective Enforcement of a Transferable Emissions Permit System with a Self-Reporting Requirement," Journal of Regulatory Economics, Springer, vol. 18(2), pages 113-131, September.
    3. Malik, Arun S., 1990. "Markets for pollution control when firms are noncompliant," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages 97-106, March.
    4. Keeler, Andrew G., 1991. "Noncompliant firms in transferable discharge permit markets: Some extensions," Journal of Environmental Economics and Management, Elsevier, vol. 21(2), pages 180-189, September.
    5. Milliman, Scott R., 1986. "Optimal fishery management in the presence of illegal activity," Journal of Environmental Economics and Management, Elsevier, vol. 13(4), pages 363-381, December.
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    Cited by:

    1. repec:kap:enreec:v:68:y:2017:i:2:d:10.1007_s10640-016-0017-3 is not listed on IDEAS
    2. Aaron Hatcher, 2014. "Implications of a Discard Ban in Multispecies Quota Fisheries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(3), pages 463-472, July.
    3. Rögnvaldur Hannesson, 2011. "When is fish quota enforcement worth while? A study of the Northeast Arctic cod," Journal of Bioeconomics, Springer, vol. 13(2), pages 139-160, July.
    4. Okumura, Yasunori, 2016. "Individual transferable quotas in Cournot competition," Economic Modelling, Elsevier, vol. 55(C), pages 315-321.
    5. Alvear, Santiago A. Bermeo, 2006. "Modelling an ITQ Scheme in the Galapagos Marine Reserve Spiny Lobster Fishery," 2006 Conference, August 24-25, 2006, Nelson, New Zealand 31973, New Zealand Agricultural and Resource Economics Society.
    6. Murphy, James J. & Stranlund, John K., 2007. "A laboratory investigation of compliance behavior under tradable emissions rights: Implications for targeted enforcement," Journal of Environmental Economics and Management, Elsevier, vol. 53(2), pages 196-212, March.
    7. Jorge Dresdner & Carlos Chávez & Omar Barriga, 2015. "Compliance in Artisanal Fisheries: Do Morality, Legitimacy, and Peer Effects Matter?," Marine Resource Economics, University of Chicago Press, vol. 30(4), pages 349-370.
    8. John K. Stranlund, 2006. "Risk Aversion and Compliance in Markets for Pollution Control," Working Papers 2006-2, University of Massachusetts Amherst, Department of Resource Economics.
    9. John Stranlund, 2007. "The regulatory choice of noncompliance in emissions trading programs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(1), pages 99-117, September.
    10. Akpalu, Wisdom, 2011. "Determinants of noncompliance with light attraction regulation among inshore fishers in Ghana," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(2), pages 172-177, April.
    11. Hatcher, Aaron, 2012. "Market power and compliance with output quotas," Resource and Energy Economics, Elsevier, vol. 34(2), pages 255-269.
    12. Itziar Lazkano & Linda Nøstbakken, 2016. "Quota Enforcement and Capital Investment in Natural Resource Industries," Marine Resource Economics, University of Chicago Press, vol. 31(3), pages 339-354.
    13. Alvear, Santiago A. Bermeo, 2006. "Modelling an ITQ Scheme in the Galapagos Marine Reserve Spiny Lobster Fishery," 2006 Conference, August 24-25, 2006, Nelson, New Zealand 31973, New Zealand Agricultural and Resource Economics Society.
    14. Hugo Salgado & Carlos Chávez, 2016. "Using Taxes to Deter Illegal Fishing in ITQ Systems," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(4), pages 709-724, August.
    15. Parés, Claudio & Dresdner, Jorge & Salgado, Hugo, 2015. "Who should set the total allowable catch? Social preferences and legitimacy in fisheries management institutions," Marine Policy, Elsevier, vol. 54(C), pages 36-43.
    16. Murphy, James J. & Stranlund, John K., 2006. "Direct and market effects of enforcing emissions trading programs: An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 61(2), pages 217-233, October.
    17. José-María Da-Rocha & Jaume Sempere, 2017. "ITQs, Firm Dynamics and Wealth Distribution: Does Full Tradability Increase Inequality?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(2), pages 249-273, October.
    18. Lars Hansen & Frank Jensen & Linda Nøstbakken, 2014. "Quota Enforcement in Resource Industries: Self-Reporting and Differentiated Inspections," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(4), pages 539-562, August.
    19. Nøstbakken, Linda, 2008. "Fisheries law enforcement--A survey of the economic literature," Marine Policy, Elsevier, vol. 32(3), pages 293-300, May.

    More about this item

    Keywords

    enforcement; illegal fishing; individual transferable quotas; quota markets; L51; Q22;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery

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