Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management

Terry L. Anderson, Ragnar Arnason and Gary Libecap

No 16519, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D23 K11 N5 Q22 (search for similar items in EconPapers)
Date: 2010-11
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Published as “Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management,” Terry Anderson, Ragnar Arnason, and Gary D. Libecap, Annual Review of Resource Economics, 2011.

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