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Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management

Author

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  • Terry L. Anderson
  • Ragnar Arnason
  • Gary D. Libecap

Abstract

We show that grandfathering fishing rights to local users or recognizing first possessions is more dynamically efficient than auctions of such rights. It is often argued that auctions allocate rights to the highest-valued users and thereby maximize resource rents. We counter that rents are not fixed in situ, but rather depend additionally upon the innovation, investment, and collective actions of fishers, who discover and enhance stocks and convert them into valuable goods and services. Our analysis shows how grandfathering increases rents by raising expected rates of return for investment, lowering the cost of capital, and providing incentives for collective action.

Suggested Citation

  • Terry L. Anderson & Ragnar Arnason & Gary D. Libecap, 2010. "Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management," NBER Working Papers 16519, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16519 Note: DAE EEE
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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery

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