Unraveling the Multiple Margins of Rent Generation from Individual Transferable Quotas

• Main Authors: Reimer, Matthew, Abbott, Joshua, Wilen, James
• Format: Other/Unknown Material
• Language: English; unknown
• Published: International Institute of Fisheries Economics and Trade
• Subjects: Fisheries > Economic aspects > Congresses; Sustainable fisheries > Congresses; Bering Sea; Red king crab
• Online Access: https://ir.library.oregonstate.edu/concern/conference_proceedings_or_journals/1r66j570g

The notion of individual transferable quotas (ITQs) has permeated the fisheries economics literature over the last 40 years. The most long-standing prediction about ITQs has been extensively documented, namely that transferable property rights to harvest induce changes along the extensive margin via consolidation of quota among a smaller number of vessels. However, behavioral changes along the intensive margin as harvesters adjust their fishing practices in response to ITQ incentives have been relatively neglected. We use the 2005 introduction of ITQs to the Bering Sea red king crab fishery as a platform to decompose the sources of rent generation across both extensive and intensive margins. We develop a conceptual model of the crab harvesting production process that captures the principle decisions made by the skipper and crew throughout a fishing season with respect to traveling to and from fishing grounds and the process of setting and lifting traps. We also depict the decision-making environment under pre- and post-ITQ settings by modeling a limited entry and an ITQ fishery as two different symmetric games played between all participating harvesters in the fishery. Using multiple treatments in a hypothetical experimental setting, we show that the effects of introducing ITQs are potentially multi-faceted, non-monotonic, and at times contrary to prior expectations. For the crab fishery we find that the bulk of rents were generated by consolidation across the extensive margin. Keywords: Understanding and Modeling Fishing/Sector Behavior Part I, Fishing Sector Behavior & Activities, Fisheries Economics