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The Effects of ITQ Management on Fishermen’s Welfare When the Processing Sector is Imperfectly Competitive

  • David M. McEvoy

    ()

    (Department of Resource Economics, University of Massachusetts Amherst)

  • Sylvia Brandt

    ()

  • Nathalie Lavoie

    ()

    (Department of Resource Economics, University of Massachusetts Amherst)

  • Sven Anders

    ()

    (Department of Rural Economy, University of Alberta Edmonton)

In this paper we use a general model of imperfect competition to predict welfare changes within an open-access fishery transitioning to individual transferable quota (ITQ) management. Although related research has explored the effects of market power in the harvesting sector on ITQ performance, none have considered the implications of an imperfectly competitive processing sector. This study addresses this question specifically in the context of the Atlantic herring fishery, although its implications are relevant to all fisheries with similar industry structure. Our results show that ITQs could have a negative impact on fishermen’s welfare when processors have market power and the cap on aggregate harvest is binding or becomes binding with the implementation of ITQs.

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File URL: http://courses.umass.edu/resec/workingpapers/documents/ResEcWorkingPaper2007-3.pdf
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Paper provided by University of Massachusetts Amherst, Department of Resource Economics in its series Working Papers with number 2007-3.

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Length: 47 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:dre:wpaper:2007-3
Contact details of provider: Web page: http://www.umass.edu/resec/

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  1. Acheson, James M, 1985. "The Maine Lobster Market: Between Market and Hierarchy," Journal of Law, Economics and Organization, Oxford University Press, vol. 1(2), pages 385-98, Fall.
  2. Shu-Yu Huang & Richard J. Sexton, 1996. "Measuring Returns to an Innovation in an Imperfectly Competitive Market: Application to Mechanical Harvesting of Processing Tomatoes in Taiwan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 558-571.
  3. Heaps, Terry, 2003. "The effects on welfare of the imposition of individual transferable quotas on a heterogeneous fishing fleet," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 557-576, November.
  4. Steve McCorriston, 2002. "Why should imperfect competition matter to agricultural economists?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(3), pages 349-371, July.
  5. Shalit, Haim & Yitzhaki, Shlomo, 2002. " Estimating Beta," Review of Quantitative Finance and Accounting, Springer, vol. 18(2), pages 95-118, March.
  6. Brandt, Sylvia & McEvoy, David, 2006. "Distributional effects of property rights: Transitions in the Atlantic Herring fishery," Marine Policy, Elsevier, vol. 30(6), pages 659-670, November.
  7. Weninger, Quinn, 1998. "Assessing Efficiency Gains From Individual Transferable Quotas: An Application to the Mid-Atlantic Surf Clam and Ocean Quahog Fishery," Staff General Research Papers 5065, Iowa State University, Department of Economics.
  8. Weninger, Quinn & Grafton, Quinten R. & Kirkley, James E. & Squires, Dale, 2000. "A Guide to Economic Evaluation of Individual Transferable Quota Fisheries," Staff General Research Papers 10574, Iowa State University, Department of Economics.
  9. Mingxia Zhang, 1997. "The Effects of Imperfect Competition on the Size and Distribution of Research Benefits," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1252-1265.
  10. Richard J. Sexton, 2000. "Industrialization and Consolidation in the U.S. Food Sector: Implications for Competition and Welfare," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1087-1104.
  11. 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.
  12. Homans, Frances R. & Wilen, James E., 2005. "Markets and rent dissipation in regulated open access fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 381-404, March.
  13. Richard J. Sexton & Mingxia Zhang, 1996. "A Model of Price Determination for Fresh Produce with Application to California Iceberg Lettuce," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 924-934.
  14. Dale Squires & R. Quentin Grafton & Mohammed Ferdous Alam & Ishak Haji Omar, 2002. "Technical Efficiency in the Malaysian Gill Net Artisanal Fishery," Economics and Environment Network Working Papers 0204, Australian National University, Economics and Environment Network.
  15. Adesoji Adelaja & Julia Menzo & Bonnie McCay, 1998. "Market Power, Industrial Organization and Tradeable Quotas," Review of Industrial Organization, Springer, vol. 13(5), pages 589-601, October.
  16. Boyce, John R., 2004. "Instrument choice in a fishery," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 183-206, January.
  17. Terrebonne R. Peter, 1995. "Property Rights and Entrepreneurial Income in Commercial Fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 68-82, January.
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