Individual Transferable Quota Markets under Illegal Fishing

Chávez, Carlos; Salgado, Hugo

doi:10.1007/s10640-005-1543-6

Cited by 44 publications

(31 citation statements)

References 12 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…It is important to note that the model of this paper can be applied to other tradable property rights programs with minor modifications. In fact, recent papers by Hatcher (2005) and Chavez and Salgado (2005) are direct applications of the literature on compliance and enforcement of emissions trading to individual transferable fishing quotas (ITQs). Thus the results of this paper apply to ITQ policies, as well as to other policies that seek to limit some activity through a market for the rights to engage in the activity.…”

Section: A Model Of Compliance Under Emissions Tradingmentioning

confidence: 99%

Risk aversion and compliance in markets for pollution control

Stranlund

2008

Journal of Environmental Management

View full text Add to dashboard Cite

Abstract:This paper examines the effects of risk aversion on compliance choices in markets for pollution control. A firm's decision to be compliant or not is independent of its manager's risk preference. However, noncompliant firms with risk averse managers will have lower violations than otherwise identical firms with risk neutral managers. The violations of noncompliant firms with risk averse managers are independent of differences in their benefits from emissions and their initial allocations of permits if and only if their managers' utility functions exhibit constant absolute risk aversion. However, firm-level characteristics do impact violation choices when managers have coefficients of absolute risk aversion that are increasing or decreasing in profit levels. Finally, in the equilibrium of a market for emissions rights with widespread noncompliance, risk aversion is associated with higher permit prices, better environmental quality, and lower aggregate violations. 1 Risk Aversion and Compliance in Markets for Pollution ControlAbstract: This paper examines the effects of risk aversion on compliance choices in markets for pollution control. A firm's decision to be compliant or not is independent of its manager's risk preference. However, noncompliant firms with risk averse managers will have lower violations than otherwise identical firms with risk neutral managers. The violations of noncompliant firms with risk averse managers are independent of differences in their benefits from emissions and their initial allocations of permits if and only if their managers' utility functions exhibit constant absolute risk aversion. However, firm-level characteristics do impact violation choices when managers have coefficients of absolute risk aversion that are increasing or decreasing in profit levels. Finally, in the equilibrium of a market for emissions rights with widespread noncompliance, risk aversion is associated with higher permit prices, better environmental quality, and lower aggregate violations.

show abstract

Section: A Model Of Compliance Under Emissions Tradingmentioning

confidence: 99%

Risk aversion and compliance in markets for pollution control

Stranlund

2008

Journal of Environmental Management

View full text Add to dashboard Cite

show abstract

“…Note that as in Chavez and Salgado (2005) quota price, x, is decreasing in illegal fishing. The existence of ITQs modifies the agency problem.…”

Section: Do Itq's Increase Welfare Under Illegal Fishing When Agenciementioning

confidence: 98%

“…As in Strandlund and Dhanda (1999) and Chavez and Salgado (2005), we assume that the penalty function, f ðtÞ is zero for zero quota violation, t ¼ hðeÞ À q ¼ 0, and strictly increasing and convex for a positive quota violation, t ¼ hðeÞ À q [ 0. We assume as Chavez et al (2008) that f ðtÞ ¼ a 2 À Á t 2 þ ct; with and c greater than zero.…”

Section: A Simple Fishery With Illegal Fishingmentioning

confidence: 99%

“…As in Chavez and Salgado (2005), as quota increases, illegal fishing decreases but total harvest increases. Moreover, average productivity of the resource decreases as the quota increases.…”

Section: A Simple Fishery With Illegal Fishingmentioning

confidence: 99%

“…We assume that the enforcement authority cannot commit on the initial quotas recommended by scientific committees. We build upon Strandlund and Dhanda (1999), Chavez and Salgado (2005), and Chavez et al (2008) to analyze the enforcement authority behavior in a simple game theoretic model where the fisherman level of quota violation, non-compliance, is endogenous. As Strandlund and Dhanda (1999) quota violation is induced by an enforcement technology which is insufficient to guarantee full compliance.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Credible Enforcement Policies Under Illegal Fishing: Does Individual Transferable Quotas Induce to Reduce the Gap Between Approved and Proposed Allowable Catches?

Rocha

Villasante

González³

2013

AMBIO

View full text Add to dashboard Cite

In general, approved Total Allowable Catches (TACs) are higher than proposed TACs by the scientific assessment and reported landings approved are higher than approved TAC. We build a simple enforcement agency's behavior model that generates-as a rational behaviorthose two facts. The model has two ingredients. First, there exists illegal fishing generated by an imperfect enforcement technology; second, the enforcement agency cannot commit on announced penalties. We show that lack of commitment increases the potential benefits for national enforcement agency of deviating from proposal (scientific optimal) quotas. Although the enforcement agency wants to announce a low quota target to induce a low level of illegal harvest, it will find optimal to revise the quota announced in order to reduce penalties and improve fishermen welfare. Therefore, agencies find it optimal to approve higher quotas than that proposed by the scientific advice. Our main result is to show that when full compliance is not possible, and national agencies cannot commit, the introduction of Individual Transferable Quotas increases the potential benefits for agencies of deviating from the optimal proposed TAC by the scientific advised.

show abstract

The regulatory choice of noncompliance in emissions trading programs

Stranlund

2006

Environ Resource Econ

View full text Add to dashboard Cite

This paper addresses the following question: To achieve a fixed aggregate emissions target cost-effectively, should emissions trading programs be designed and implemented to achieve full compliance, or does allowing a certain amount of noncompliance reduce the costs of reaching the emissions target? The total costs of achieving the target consist of aggregate abatement costs, monitoring costs, and the expected costs of collecting penalties from noncompliant firms. Under common assumptions, I show that allowing noncompliance is cost-effective only if violations are enforced with an increasing marginal penalty. However, one can design a policy that induces full compliance with a constant marginal penalty that meets the aggregate emissions target with lower expected costs. This last result does not depend on setting an arbitrarily high constant marginal penalty. In fact, the marginal penalty need not be higher than the equilibrium marginal penalty under the policy with the increasing marginal penalty, and can actually be lower. Finally, tying the marginal penalty directly to the permit price allows the policy objective to be achieved without any knowledge of firms' abatement costs.

show abstract

Individual Transferable Quota Markets under Illegal Fishing

Cited by 44 publications

References 12 publications

Risk aversion and compliance in markets for pollution control

Risk aversion and compliance in markets for pollution control

Credible Enforcement Policies Under Illegal Fishing: Does Individual Transferable Quotas Induce to Reduce the Gap Between Approved and Proposed Allowable Catches?

The regulatory choice of noncompliance in emissions trading programs

Contact Info

Product

Resources

About