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 language | English |
|---|---|
| Pages (from-to) | 427-436 |
| Number of pages | 10 |
| Journal | Journal of Environmental Economics and Management |
| Volume | 49 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - May 2005 |