Capacity reduction, quota trading and productivity: the case of a fishery *

Kevin J. Fox, R. Quentin Grafton, Tom Kompas and Tuong Nhu Che

Australian Journal of Agricultural and Resource Economics, 2006, vol. 50, issue 2, pages 189-206

Abstract: We present the first ex post study that quantitatively analyses the effects of a licence buy-back and enhanced quota trading on the profitability and productivity of individual vessels in a fishery. Using firm-level data and a profit index decomposition method, we find that small and large vessels and three different trawler fleets all experienced substantial productivity gains in the year immediately following a licence buy-back and the establishment of a quota brokerage service. The apparent ongoing benefits of the buy-back and increased quota trading over the sample period are in stark contrast to the generally unfavourable long-term outcomes commonly associated with vessel buy-backs in input-controlled fisheries. Copyright Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd 2006.

Date: 2006

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