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Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management

Posted: 16 Sep 2011  

Terry L. Anderson

PERC - Property and Environment Research Center

Ragnar Arnason

University of Iceland

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

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Date Written: October 2011

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 (October 2011). Annual Review of Resource Economics, Vol. 3, Issue 1, pp. 159-179, 2011. Available at SSRN: https://ssrn.com/abstract=1928381 or http://dx.doi.org/10.1146/annurev-resource-083110-120056

Terry L. Anderson (Contact Author)

PERC - Property and Environment Research Center ( email )

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

Ragnar Arnason

University of Iceland ( email )

Iceland

Gary D. Libecap

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 )

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Tucson, AZ 85721-0108
United States
520-621-4821 (Phone)
520-626-5269 (Fax)

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

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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