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Cartels and dynamic contracts in sharefishing. (English) Zbl 0703.90017

Summary: This paper studies a principal-agent model of a fishery, where cooperative vessel owners (the principal) hire unorganized fishermen (agents) to operate the vessels. On each vessel fishermen’s remuneration is a share of the value of the catch. The results show that harvest shares of myopic fishermen will be reduced when cartels are established. Intertemporal optimization of the resource use by the cartel is accompanied by the problem of the cartel’s viability. Share contracts are traditionally motivated by risk sharing and by the avoidance of labor monitoring. The results of this paper suggest new important reasons for the commonness of share contracts in fishing. Sharefishing is a self- adaptive and time-consistent remuneration system as it automatically accommodates differences in individual crews’ labor supplies due to differences in fishermen’s skills and cost factors. An essential result found that supports harvest sharing is the relative simplicity of the social management policy; optimal regulation is accomplished by a constant subsidy on the price of fish. The subsidy policy is time consistent and does not change as the stock level changes. The paper also addresses conditions under which stock extinction does not occur in sharefishing.

MSC:

91B76 Environmental economics (natural resource models, harvesting, pollution, etc.)
91B62 Economic growth models
92D40 Ecology
92D25 Population dynamics (general)
90B30 Production models
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