Unraveling the Multiple Margins of Rent Generation from Individual Transferable Quotas

M. N. Reimer, J. K. Abbott, J. E. Wilen
2014 Land Economics  
The prediction that individual transferable quotas (ITQs) induce changes along the extensive margin via consolidation of quota among fewer vessels has been extensively documented. In contrast, behavioral changes along the intensive margin as harvesters adjust their fishing practices in response to ITQ incentives have been relatively neglected. We use the 2005 introduction of ITQs to the Bering Sea red king crab fishery as a platform to decompose the sources of rent generation across both
more » ... across both extensive and intensive margins. We develop a conceptual model of the crab harvesting production process that captures the principal decisions made by the skipper and crew throughout a fishing season. We depict the decision-making environment under pre-and post-ITQ settings by modeling a limited entry and an ITQ fishery as two different symmetric games. We show that the effects of introducing ITQs are potentially multi-faceted, non-monotonic, and at times contrary to prior expectations. For the crab fishery we find that the bulk of rents were generated by consolidation across the extensive margin.
doi:10.3368/le.90.3.538 fatcat:7jlkdyb2ijcrvm4kuowbnocn3i