Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management
Gary D. Libecap
University of California, Santa Barbara - Donald Bren School of Environmental Science & Management; University of Arizona - Karl Eller Center; National Bureau of Economic Research (NBER); PERC - Property and Environment Research Center
University of Iceland
Terry L. Anderson
PERC - Property and Environment Research Center
December 1, 2010
ICER Working Paper No. 31/2010
PERC Research Paper No. 12/10
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.
Number of Pages in PDF File: 32
Keywords: Fishing rights, property rights, allocating fishing rights, grandfathering fishing rights, auctions
JEL Classification: N 22, Q0, Q22, K11, D23
Date posted: January 17, 2011 ; Last revised: June 15, 2012
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