Policy Change Anticipation in the Buyback Context
Barbara Hutniczak (),
Niels Vestergaard () and
Dale Squires ()
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Barbara Hutniczak: University of Maryland Center for Environmental Science
Dale Squires: University of California San Diego
Environmental & Resource Economics, 2019, vol. 73, issue 1, No 6, 132 pages
Abstract To what degree might an anticipated policy change delay the fleet restructuring process initiated by a vessel buyback? This paper addresses the issue by estimating a restricted profit function to analyze an overcapitalized fishing fleet subject to restrictive regulation on the harvest of its primary target species. Fishermen’s expectations and likely responses to the future regulations regarding individual quotas are modeled in the context of a time-limited buyback program. The Polish trawler fleet targeting primarily cod provides an application. Analyzing potential individual quota tradability, we find that considerable shifts in disinvestment are to be found due to anticipated policy change. The mechanisms driving discrepancies include capitalized value of quota, as well as the tradability option capitalized into other inputs with inelastic supply.
Keywords: Overcapacity; Policy anticipation; Vessel buyback; Polish trawl fishery (search for similar items in EconPapers)
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