ICER Working Paper No. 31/2010
32 Pages Posted: 17 Jan 2011 Last revised: 15 Jun 2012
Date Written: December 1, 2010
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: 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