Fleet dynamics and overcapitalization under rational expectations

Jose Maria Da Rocha Alvarez, Raul Prellezo, Jaume Sempere and Luis Taboada-Antelo

MPRA Paper from University Library of Munich, Germany

Abstract: When individual stay/exit decisions depend on the opportunity cost of exiting, capital malleability is endogenously determined by the instruments used for stock rehabilitation. In a General Equilibrium framework, we characterize the transitional dynamics caused by stock rehabilitation policies. We show that a management policy based on input controls generates less exit, a less productive fleet, and overcapitalization, as input controls require a higher number of firms to achieve the same biological targets. Using data from the Multiannual Plan for the Western Mediterranean, we show that the use of input controls generates a Spanish fleet around 14 percent higher than the one that would result from a non distortionary instrument.

Keywords: Firm dynamics; Investment; General Equilibrium; Fisheries (search for similar items in EconPapers)
JEL-codes: Q20 (search for similar items in EconPapers)
Date: 2016-12-01
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https://mpra.ub.uni-muenchen.de/87158/1/MPRA_paper_87158.pdf revised version (application/pdf)

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