An experimental analysis of assignment problems and economic rent dissipation in quota managed fisheries — ASN Events

An experimental analysis of assignment problems and economic rent dissipation in quota managed fisheries (#75)

Timothy J Emery 1 , John G Tisdell 2 , Klaas Hartmann 1 , Bridget S Green 1 , Caleb Gardner 1 , Rafael Leon 1
  1. Institute for Marine and Antarctic Studies, University of Tasmania, Hobart, TAS, Australia
  2. Tasmanian School of Business and Economics, University of Tasmania, Hobart, TAS, Australia

If the spatial and temporal distribution of resources is not homogenous it creates an assignment problem. While the adoption of individual (or transferable) quota management in many commercial fisheries has resolved issues of over-appropriation, assignment problems may remain due to the spatial and temporal complexity of fisheries resources, which creates heterogeneity in the economic value of catches. This leads to competition between fishers for the most valuable portions of the stock and dissipation of economic rent. In order to solve an assignment problem, either the quota units must be fully delineated in time or space, or fishers need to coordinate their effort. When fishers’ sociocultural background, wealth, business structure and/or expertise are heterogeneous, reaching an agreement on a preferred strategy for solving an assignment problem can be particularly challenging, because some may see themselves as disproportionately more affected by its adoption. To investigate whether an assignment problem could be effectively managed by two types of fishers (lease quota fishers and quota owners), a series of economic experiments were conducted. Participants were more likely to cooperate and make socially optimal decisions to prevent rent dissipation when they could communicate amongst themselves and were in an experimental group containing solely quota owners. Experimental groups containing both types of fishers were less likely to cooperate because lease quota fishers may have seen themselves as disproportionately affected by the adoption of a socially-optimal strategy for preventing rent dissipation due to: (i) inequality in wealth; (ii) insecurity of tenure; and (iii) asymmetric information exchange.

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