Non-compliance and the quota price in an ITQ fishery |
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Authors: | Aaron Hatcher |
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Institution: | aCentre for the Economics and Management of Aquatic Resources, Department of Economics, University of Portsmouth, Portsmouth PO1 3LJ, UK |
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Abstract: | This paper examines the effects of non-compliance on quota demands and the equilibrium quota price in an ITQ fishery. I show that whereas lower quota prices are implied unambiguously by expected penalties which are a function of the absolute violation size, the expectation of penalties based upon relative violations of quota demands can, under certain conditions, produce higher quota prices than in a compliant quota market. If there are both compliant and non-compliant firms in the fishery, the result would then be a shift in quota demand from compliant to non-compliant firms, rather than the reverse. The findings are generally applicable to quota markets in other industries, including pollution permit markets. |
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Keywords: | Fisheries management Quotas ITQs Enforcement Non-compliance Pollution permits |
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