Non-compliance and the quota price in an ITQ fishery

Aaron Hatcher

Research output: Contribution to journalArticlepeer-review

Abstract

This paper examines the effects of non-compliance on quota demands and the equilibrium quota price in an ITQ fishery. I show that whereas lower quota prices are implied unambiguously by expected penalties which are a function of the absolute violation size, the expectation of penalties based upon relative violations of quota demands can, under certain conditions, produce higher quota prices than in a compliant quota market. If there are both compliant and non-compliant firms in the fishery, the result would then be a shift in quota demand from compliant to non-compliant firms, rather than the reverse. The findings are generally applicable to quota markets in other industries, including pollution permit markets.
Original languageEnglish
Pages (from-to)427-436
Number of pages10
JournalJournal of Environmental Economics and Management
Volume49
Issue number3
DOIs
Publication statusPublished - May 2005

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