A Model of Quota Prices in a Multispecies Fishery with “Choke” Species and Discarding

Aaron Hatcher ()
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Aaron Hatcher: University of Portsmouth

Environmental & Resource Economics, 2022, vol. 82, issue 4, No 2, 825-846

Abstract: Abstract Using a two-stage optimisation model, we simulate the determination of market-clearing quota lease prices in a multispecies fishery. Assuming fixed proportions technologies, we find that equilibrium quota prices are jointly determined. Price equilibria are sensitive to both the number of quota species and the heterogeneity of the fleet, with corner prices observed where there are a relatively large number of species. Where the fleet is very heterogeneous, quota prices fail to capture all rent as resource rent and inframarginal rents are earned by some vessels. If there is excess demand for quota (for example, as a result of the exhaustion of the quota for a “choke” species) bidding up of the quota price causes all other quota prices to fall. This can result in some vessels starting to earn inframarginal rents even though they are discarding part of the catch. We also use the model to examine the impact of a “deemed value” charge for over-quota landings.

Keywords: ITQs; Quota prices; Quota markets; Multispecies fisheries; Discarding (search for similar items in EconPapers)
JEL-codes: Q22 Q28 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10640-022-00689-8

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