Are Bans Effective under Limited Monitoring? Evidence from High Seas Management

31 Pages Posted: 28 Jan 2019 Last revised: 9 Nov 2020

See all articles by Hamsa Bastani

Hamsa Bastani

University of Pennsylvania - The Wharton School

Joann F. de Zegher

Massachusetts Institute of Technology (MIT) - Management Science (MS)

Date Written: January 15, 2019

Abstract

To mitigate environmental and social harm, policy-makers often provide incentives or impose sanctions to discourage harmful behavior. Such policies are usually implemented with limited monitoring capabilities, which may cause strategic behavior that leads to unintended consequences. Three related questions for any policy are therefore: do targeted agents comply on elements that are visible (visible compliance), do agents behave strategically to undermine the policy (effectiveness), and are raw material prices affected (economic cost)? We study these questions empirically in the context of a zero-tolerance policy (a ban) on seafood transshipments on the high seas --- a ban imposed because seafood transshipments are associated with illegal fishing and widespread forced labor. Novel satellite-based datasets, available ex-post several years after implementation of the ban, offer a unique opportunity to study the effect of the ban in hindsight. Combining satellite-based and economic datasets, and exploiting variation across regions and over time, we find that a ban reduces the yearly growth in transshipment rates by an estimated 58% despite significant monitoring challenges, and does not cause appreciable strategic behavior. A difference-in-differences analysis of landing prices suggests that this reduction comes at an estimated cost of 3% higher raw material prices.

Keywords: zero-tolerance policy, transshipment, remote sensing, strategic behavior, limited monitoring

JEL Classification: Q2, Q22, Q28

Suggested Citation

Bastani, Hamsa and de Zegher, Joann F., Are Bans Effective under Limited Monitoring? Evidence from High Seas Management (January 15, 2019). Available at SSRN: https://ssrn.com/abstract=3312963 or http://dx.doi.org/10.2139/ssrn.3312963

Hamsa Bastani (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Joann F. De Zegher

Massachusetts Institute of Technology (MIT) - Management Science (MS) ( email )

United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
214
Abstract Views
1,409
rank
173,227
PlumX Metrics