Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management

Terry Anderson (), Ragnar Arnason () and Gary D. Libecap ()
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Terry Anderson: PERC, Bozeman Montana Hoover Institution, Bozeman, Montana 59718
Ragnar Arnason: Department of Economics, University of Iceland, 101 Reykjavik, Iceland
Gary D. Libecap: Bren School of Environmental Science and Management, University of California, Santa Barbara, California 93106

Annual Review of Resource Economics, 2011, vol. 3, issue 1, 159-179

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.

Keywords: fishing rights; property rights; allocating fishing rights; grandfathering fishing rights; auctions of fishing rights; fisheries rent (search for similar items in EconPapers)
JEL-codes: D23 K11 Q0 Q22 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (10)

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