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Efficiency of Individual Transferable Quotas (ITQs) when Fishers are able to Choose Vessel Sizes: An Experimental Approach

Author

Listed:
  • Keisaku Higahsida

    () (School of Economics, Kwansei Gakuin University)

  • Kenta Tanaka

    (Graduate School of Environmental Studies, Tohoku University)

  • Shunsuke Managi

    (Graduate School of Environmental Studies, Tohoku University)

Abstract

Employing an experimental approach, this paper examines whether the efficiency of fishery management can be achieved under Individual Transferable Quotas (ITQs) regimes, when fishers can choose vessel sizes. In addition to the most common types of experiments for trading permits, we analyze the situation in which the subjects choose one from two vessel types: a large-scale or a small-scale. The fixed cost for the large-scale is higher than that for the small-scale, whereas the variable cost for the large-scale is lower. We find that the average trading price converges to the theoretical equilibrium price given numbers of both types of vessels. We also find that vessels are chosen rationally in the sense that, the greater is the average trading price minus the theoretical equilibrium price in the past periods, the less incentive subjects have to invest in large-scale vessels. Moreover, quota prices in the first period could influence not only the quota prices but also the numbers of both types of vessels in the ensuing periods, and initial allocation could affect the rational choice of vessels by subjects/fishers.

Suggested Citation

  • Keisaku Higahsida & Kenta Tanaka & Shunsuke Managi, 2010. "Efficiency of Individual Transferable Quotas (ITQs) when Fishers are able to Choose Vessel Sizes: An Experimental Approach," Discussion Paper Series 57, School of Economics, Kwansei Gakuin University, revised Jun 2010.
  • Handle: RePEc:kgu:wpaper:57
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    References listed on IDEAS

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    1. Van Boening, Mark V & Wilcox, Nathaniel T, 1996. "Avoidable Cost: Ride a Double Auction Roller Coaster," American Economic Review, American Economic Association, vol. 86(3), pages 461-477, June.
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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. 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.

    More about this item

    Keywords

    Individual Transferable Quotas; tradable permits; experiment; double auction;

    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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