Multiproduct Industries: The Case of Multispecies Individual Quota Fisheries

Niels Vestergaard

Canadian Journal of Economics, 1999, vol. 32, issue 3, 729-743

Abstract: A framework is developed to measure the welfare effects of individual quota reforms in multiproduct industries using the multimarket welfare measure techniques suggested by Just, Hueth, and Schmitz (1982) and the concept of virtual price in the production theory literature (Neary 1995; Squires and Kirkley 1996). Under joint in input production it is shown that quasirent under a single quota can be measured by the producer surplus either in the output market for quota output or in the quota market. Under multiple quotas the welfare effects of quota policies can be measured in one of the quota markets using inverse derived equilibrium demand curves. These results are obtained for a joint in input technology, where positive production of at least one of the quota outputs is necessary for the firm to continue to operate. Application of the inverse derived demand functions for welfare measurement is shown for both transferable and nontransferable quotas.

Date: 1999
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