Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management

40 Pages Posted: 8 Nov 2010

See all articles by Terry L. Anderson

Terry L. Anderson

PERC - Property and Environment Research Center

Ragnar Arnason

University of Iceland

Gary D. Libecap

University of California, Santa Barbara (UCSB) - 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

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Date Written: November 2010

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.

Suggested Citation

Anderson, Terry L. and Arnason, Ragnar and Libecap, Gary D., Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management (November 2010). NBER Working Paper No. w16519. Available at SSRN: https://ssrn.com/abstract=1703312

Terry L. Anderson (Contact Author)

PERC - Property and Environment Research Center ( email )

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Ragnar Arnason

University of Iceland ( email )

Iceland

Gary D. Libecap

University of California, Santa Barbara (UCSB) - Donald Bren School of Environmental Science & Management ( email )

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HOME PAGE: http://www.bpa.arizona.edu/~libecap

National Bureau of Economic Research (NBER)

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PERC - Property and Environment Research Center

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