IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v73y2019i1d10.1007_s10640-018-0252-x.html
   My bibliography  Save this article

Policy Change Anticipation in the Buyback Context

Author

Listed:
  • Barbara Hutniczak

    () (University of Maryland Center for Environmental Science)

  • Niels Vestergaard

    () (University of Southern Denmark)

  • Dale Squires

    () (University of California San Diego)

Abstract

To what degree might an anticipated policy change delay the fleet restructuring process initiated by a vessel buyback? This paper addresses the issue by estimating a restricted profit function to analyze an overcapitalized fishing fleet subject to restrictive regulation on the harvest of its primary target species. Fishermen’s expectations and likely responses to the future regulations regarding individual quotas are modeled in the context of a time-limited buyback program. The Polish trawler fleet targeting primarily cod provides an application. Analyzing potential individual quota tradability, we find that considerable shifts in disinvestment are to be found due to anticipated policy change. The mechanisms driving discrepancies include capitalized value of quota, as well as the tradability option capitalized into other inputs with inelastic supply.

Suggested Citation

  • Barbara Hutniczak & Niels Vestergaard & Dale Squires, 2019. "Policy Change Anticipation in the Buyback Context," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(1), pages 111-132, May.
  • Handle: RePEc:kap:enreec:v:73:y:2019:i:1:d:10.1007_s10640-018-0252-x
    DOI: 10.1007/s10640-018-0252-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10640-018-0252-x
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John D. Burger, 2004. "The Policy Anticipation Hypothesis: Evidence from the Federal Funds Futures Market," Contemporary Economic Policy, Western Economic Association International, vol. 22(4), pages 544-554, October.
    2. Clark, Colin W. & Munro, Gordon R. & Sumaila, Ussif Rashid, 2005. "Subsidies, buybacks, and sustainable fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 47-58, July.
    3. Andrew B. Abel & Avinash K. Dixit & Janice B. Eberly & Robert S. Pindyck, "undated". "Options, the Value of Capital, and Investment," Rodney L. White Center for Financial Research Working Papers 15-95, Wharton School Rodney L. White Center for Financial Research.
    4. Livernois, John R & Ryan, David L, 1989. "Testing for Non-jointness in Oil and Gas Exploration: A Variable Profit Function Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(2), pages 479-504, May.
    5. Diewert, W E & Wales, T J, 1992. "Quadratic Spline Models for Producer's Supply and Demand Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 705-722, August.
    6. Russell Davidson, 2007. "Bootstrapping Econometric Models," Departmental Working Papers 2007-13, McGill University, Department of Economics.
    7. Berck, Peter & Perloff, Jeffrey M, 1984. "An Open-Access Fishery with Rational Expectations," Econometrica, Econometric Society, vol. 52(2), pages 489-506, March.
    8. James E. Anderson, 1988. "The Relative Inefficiency of Quotas," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511789, September.
    9. Neary, J. P. & Roberts, K. W. S., 1980. "The theory of household behaviour under rationing," European Economic Review, Elsevier, vol. 13(1), pages 25-42, January.
    10. Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
    11. Colin W. Clark & Gordon R. Munro & Ussif Rashid Sumaila, 2007. "Buyback Subsidies, the Time Consistency Problem, and the ITQ Alternative," Land Economics, University of Wisconsin Press, vol. 83(1), pages 50-58.
    12. Fulginiti, Lilyan & Perrin, Richard, 1993. "The Theory and Measurement of Producer Response under Quotas," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 97-106, February.
    13. Grainger, Corbett A. & Costello, Christopher J., 2014. "Capitalizing property rights insecurity in natural resource assets," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 224-240.
    14. Lau, Lawrence J., 1976. "A characterization of the normalized restricted profit function," Journal of Economic Theory, Elsevier, vol. 12(1), pages 131-163, February.
    15. Russell Davidson, 2007. "Bootstrapping econometric models (in Russian)," Quantile, Quantile, issue 3, pages 13-36, September.
    16. Bockstael, Nancy E. & Opaluch, James J., 1983. "Discrete modelling of supply response under uncertainty: The case of the fishery," Journal of Environmental Economics and Management, Elsevier, vol. 10(2), pages 125-137, June.
    17. Weninger, Quinn & Just, Richard E., 1997. "An Analysis of Transition From Limited Entry to Transferable Quota: Non-Marshallian Principles for Fisheries Management," Staff General Research Papers Archive 5225, Iowa State University, Department of Economics.
    18. Frank Asche, 2001. "Fishermen's Discount Rates in ITQ Systems," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(4), pages 403-410, August.
    19. Segerson, Kathleen & Squires, Dale, 1990. "On the measurement of economic capacity utilization for multi-product industries," Journal of Econometrics, Elsevier, vol. 44(3), pages 347-361, June.
    20. Dale Squires & James Kirkley, 1996. "Individual Transferable Quotes in a Multiproduct Common Property Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 29(2), pages 318-342, May.
    21. Dupont, Diane P., 1990. "Rent dissipation in restricted access fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 19(1), pages 26-44, July.
    22. Carl Johan Lagerkvist, 2005. "Agricultural policy uncertainty and farm level adjustments--the case of direct payments and incentives for farmland investment," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 32(1), pages 1-23, March.
    23. Brandt, Sylvia J., 2003. "A Tale Of Two Clams: Policy Anticipation And Industry Productivity," Working Paper Series 14523, University of Massachusetts, Amherst, Department of Resource Economics.
    24. Gary D. Libecap & Terry L. Anderson, 2009. "The Allocation and Dissipation of Resource Rents: Implications for Fishery Reform," ICER Working Papers 13-2009, ICER - International Centre for Economic Research.
    25. Niels Vestergaard & Frank Jensen & Henning P. Jørgensen, 2005. "Sunk Cost and Entry-Exit Decisions under Individual Transferable Quotas: Why Industry Restructuring Is Delayed," Land Economics, University of Wisconsin Press, vol. 81(3).
    26. Ada Wossink & Cornelis Gardebroek, 2006. "Environmental Policy Uncertainty and Marketable Permit Systems: The Dutch Phosphate Quota Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 16-27.
    27. Dale Squires, 1988. "Production Technology, Costs, and Multiproduct Industry Structure: An Application of the Long-run Profit Function to the New England Fishing Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 21(2), pages 359-378, May.
    28. Andrew B. Abel & Avinash K. Dixit & Janice C. Eberly & Robert S. Pindyck, 1996. "Options, the Value of Capital, and Investment," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 753-777.
    29. Asche, Frank & Eggert, Håkan & Gudmundsson, Eyjolfur & Hoff, Ayoe & Pascoe, Sean, 2008. "Fisher's behaviour with individual vessel quotas--Over-capacity and potential rent: Five case studies," Marine Policy, Elsevier, vol. 32(6), pages 920-927, November.
    30. Drazen, Allan & Helpman, Elhanan, 1988. "The effect of policy anticipations on stabilization programs," European Economic Review, Elsevier, vol. 32(2-3), pages 680-686, March.
    31. Davidson, Russell & MacKinnon, James G., 2010. "Wild Bootstrap Tests for IV Regression," Journal of Business & Economic Statistics, American Statistical Association, vol. 28(1), pages 128-144.
    32. Barbara Hutniczak, 2014. "Increasing Pressure on Unregulated Species Due to Changes in Individual Vessel Quotas: An Empirical Application to Trawler Fishing in the Baltic Sea," Marine Resource Economics, University of Chicago Press, vol. 29(3), pages 201-217.
    33. Dale Squires, 1987. "Public Regulation and the Structure of Production in Multiproduct Industries: An Application to the New England Otter Trawl Industry," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 232-247, Summer.
    34. Morrison, Catherine J, 1985. "Primal and Dual Capacity Utilization: An Application to Productivity Measurement in the U.S. Automobile Industry," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(4), pages 312-324, October.
    35. Brandt, Sylvia J., 2003. "A Tale Of Two Clams: Policy Anticipation And Industry Productivity," 2003 Annual meeting, July 27-30, Montreal, Canada 22056, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    36. Koebel, Bertrand & Falk, Martin & Laisney, Francois, 2003. "Imposing and Testing Curvature Conditions on a Box-Cox Cost Function," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(2), pages 319-335, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Squires, Dale, 2016. "Firm behavior under quantity controls: The theory of virtual quantities," Journal of Environmental Economics and Management, Elsevier, vol. 79(C), pages 70-86.
    2. James Kirkley & Catherine Morrison Paul & Dale Squires, 2002. "Capacity and Capacity Utilization in Common-pool Resource Industries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 71-97, June.
    3. Russell Davidson & Victoria Zinde‐Walsh, 2017. "Advances in specification testing," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1595-1631, December.
    4. Xavier Delache & Catherine Goudounèche & Hervé Guyomard & Xavier Irz & Louis-Pascal Mahé, 1995. "Analyse micro-économique d'un marché des droits à produire en agriculture : application aux quotas laitiers en France," Économie et Prévision, Programme National Persée, vol. 117(1), pages 61-75.
    5. Chen, Qiu & Mirzabaev, Alisher, 2016. "Evaluating the Impacts of Traditional Biomass Energy Use on Agricultural Production in Sichuan, China," Discussion Papers 250213, University of Bonn, Center for Development Research (ZEF).
    6. Barbara Hutniczak, 2014. "Increasing Pressure on Unregulated Species Due to Changes in Individual Vessel Quotas: An Empirical Application to Trawler Fishing in the Baltic Sea," Marine Resource Economics, University of Chicago Press, vol. 29(3), pages 201-217.
    7. Perruso, Larry & Taylor, Timothy G. & Larkin, Sherry L., 2002. "Incorporating Stochastic Harvests Into An Analysis Of Production: The U.S. Atlantic And Gulf Of Mexico Pelagic Longline Fleet," 2002 Annual meeting, July 28-31, Long Beach, CA 19770, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Henning, Christian H.C.A. & Henningsen, Arne, 2005. "Modeling Price Response of Farm Households Under Imperfect Labor Markets: A Farm Household Approach to Family Farms in Poland," 94th Seminar, April 9-10, 2005, Ashford, UK 24431, European Association of Agricultural Economists.
    9. Glauben, Thomas & Henning, Christian H.C.A. & Henningsen, Arne, 2003. "Farm household decisions under various tax policies: Comparative static results and evidence from household data," FE Working Papers 0309, Christian-Albrechts-University of Kiel, Department of Food Economics and Consumption Studies.
    10. Khademvatani, Asgar & Gordon, Daniel V., 2013. "A marginal measure of energy efficiency: The shadow value," Energy Economics, Elsevier, vol. 38(C), pages 153-159.
    11. Ben White, 2000. "A Review of the Economics of Biological Natural Resources," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(3), pages 419-462, September.
    12. Ludo Peeters & Yves Surry, 2000. "Incorporating Price-Induced Innovation in a Symmetric Generalised McFadden Cost Function with Several Outputs," Journal of Productivity Analysis, Springer, vol. 14(1), pages 53-70, July.
    13. Diewert, Erwin & Mizobuchi, Hideyuki, 2009. "An Economic Approach to the Measurement of Productivity Growth Using Differences Instead of Ratios," Economics working papers erwin_diewert-2009-2, Vancouver School of Economics, revised 09 Jan 2009.
    14. Michiyuki Yagi & Shunsuke Managi, 2011. "Catch limits, capacity utilization and cost reduction in Japanese fishery management," Agricultural Economics, International Association of Agricultural Economists, vol. 42(5), pages 577-592, September.
    15. Asche, Frank & Bjørndal, Marianne Tranberg & Bjørndal, Trond, 2014. "Development in fleet fishing capacity in rights based fisheries," Marine Policy, Elsevier, vol. 44(C), pages 166-171.
    16. 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.
    17. Yue Ma & Shu Kam Lee & Hing Lin Chan, 2003. "Estimating Firm Behavior under Rationing: a Panel Data Study of the Chinese Manufacturing Industry," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 1(2), pages 221-244.
    18. Syster C. Maart-Noelck & Oliver Musshoff, 2013. "Investing Today or Tomorrow? An Experimental Approach to Farmers’ Decision Behaviour," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(2), pages 295-318, June.
    19. Wong, Kit Pong, 2011. "Progressive taxation and the intensity and timing of investment," Economic Modelling, Elsevier, vol. 28(1-2), pages 100-108, January.
    20. Kevin J. Fox & Ulrich Kohli & Alice Shiu, 2010. "Trade Agreements and Trade Opportunities: A Flexible Approach for Modeling Australian Export and Import Elasticities," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 513-530, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:73:y:2019:i:1:d:10.1007_s10640-018-0252-x. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Springer Nature Abstracting and Indexing). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.