Quota setting and enforcement choice in a shared fishery

We model the exploitation of an international (shared stock) fishery which is managed using national quotas determined as agreed shares of an annual total allowable catch (TAC). Given its annual quota, each country employs enforcement effort in order to maximise national social benefits while securing an acceptable degree of quota compliance by its fishing fleet. We examine the determination of the TAC which maximises the present value of the fishery, given the agreed quota shares and each country’s harvest and enforcement best-response functions. Inefficiency may derive not only from non-optimal TAC shares but also from the countries’ implicit preferences for compliance. We illustrate these findings with a set of numerical simulations. Finally, we consider the incentives for countries to bid up the TAC during international negotiations.