The Choice of Regulatory Instrument When There Is Uncertainty About Compliance with Fisheries Regulations

Lars Hansen, Frank Jensen () and Clifford Russell

American Journal of Agricultural Economics, 2008, vol. 90, issue 4, 1130-1142

Abstract: Noncompliance is an important problem for fisheries regulators, and a number of studies have considered optimal enforcement issues within fisheries regulation. Our article extends this literature by studying the implications of noncompliance for the choice between tax and quota regulation. We first develop a general stock-recruitment model of a search fishery with illegal landings and show that compliance uncertainty (where the regulator is uncertain about the extent of noncompliance) generates an efficiency advantage for taxes over individual transferable quotas. We also provide evidence that uncertainty about compliance is an important source of uncertainty for regulators. Copyright 2008, Oxford University Press.

Date: 2008
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