Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management

ICER Working Paper No. 31/2010

PERC Research Paper No. 12/10

32 Pages Posted: 17 Jan 2011 Last revised: 15 Jun 2012

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

Ragnar Arnason

University of Iceland

Terry L. Anderson

PERC - Property and Environment Research Center

Multiple version iconThere are 3 versions of this paper

Date Written: December 1, 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.

Keywords: Fishing rights, property rights, allocating fishing rights, grandfathering fishing rights, auctions

JEL Classification: N 22, Q0, Q22, K11, D23

Suggested Citation

Libecap, Gary D. and Arnason, Ragnar and Anderson, Terry L., Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management (December 1, 2010). ICER Working Paper No. 31/2010; PERC Research Paper No. 12/10. Available at SSRN: https://ssrn.com/abstract=1740455 or http://dx.doi.org/10.2139/ssrn.1740455

Gary D. Libecap (Contact Author)

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

4670 Physical Sciences North
Santa Barbara, CA 93106-5131
United States
805-893-8611 (Phone)

HOME PAGE: http://www.esm.ucsb.edu/people/usernew.asp?user=glibecap

University of Arizona - Karl Eller Center ( email )

McClelland Hall
Tucson, AZ 85721-0108
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520-626-5269 (Fax)

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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Ragnar Arnason

University of Iceland ( email )

Iceland

Terry L. Anderson

PERC - Property and Environment Research Center ( email )

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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