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Optimal quota programs

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  • Matthew A. Turner

Abstract

This paper considers the choice among three different types of individual quota programs in a multi-product fishery when technology, prices, and compliance are all uncertain: (1) Aggregated quota, which regulates the total weight of all species; (2) Disaggregated quota, which regulates the weight of each species separately, and (3) Value-based quota, which regulates the total value of all species. The paper first considers the welfare maximization problem in the context of simple stylized models of the fishery. These examples show that different types of quota programs are preferred in different fisheries. To learn which type of quota program should be preferred in an actual fishery, the paper then solves the welfare maximization problem numerically, where uncertainty about prices and technology are described by densities estimated from data on the Scotia-Fundy Cod-Haddock-Pollock fishery. In this application, a disaggregated quota program almost always dominates the other choices, and is at worst slightly inferior to a value-based quota program.

Suggested Citation

  • Matthew A. Turner, 1998. "Optimal quota programs," Working Papers mturner-98-01, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:mturner-98-01
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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. Mendelsohn, Robert, 1986. "Regulating heterogeneous emissions," Journal of Environmental Economics and Management, Elsevier, vol. 13(4), pages 301-312, December.
    3. Matthew A. Turner, 1995. "Value-based ITQ's," Working Papers mturner-95-03, University of Toronto, Department of Economics.
    4. 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.
    5. Harford, Jon D., 1978. "Firm behavior under imperfectly enforceable pollution standards and taxes," Journal of Environmental Economics and Management, Elsevier, vol. 5(1), pages 26-43, March.
    6. Stavins, Robert N., 1996. "Correlated Uncertainty and Policy Instrument Choice," Journal of Environmental Economics and Management, Elsevier, vol. 30(2), pages 218-232, March.
    7. Turner, Matthew A., 1997. "Quota-Induced Discarding in Heterogeneous Fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 186-195, June.
    8. Roberts, Marc J. & Spence, Michael, 1976. "Effluent charges and licenses under uncertainty," Journal of Public Economics, Elsevier, vol. 5(3-4), pages 193-208.
    9. 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.
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    Cited by:

    1. Matthew A. Turner, 1999. "Uncertainty and the choice of quota program in a multi-product fishery," Working Papers mturner-01-01, University of Toronto, Department of Economics.

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    More about this item

    JEL classification:

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

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