Rent-Seeking and Incentives for Compliance in the Commons

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Abstract

This article studies how rent-seeking behavior induces an informal leasing market for fishing licenses that leads harvesters in a common pool to circumvent rules set by the manager to conserve the resource, as well as how the vulnerability of the resource to such behavior depends on the management approach adopted. License leasing reduces fleet heterogeneity in terms of catch per unit effort as demonstrated by the outward shift in the stochastic production frontier. While aggregate harvest is invariant to alternative profiles of fleet heterogeneity in quota-managed fisheries, the productivity of the restricted variable–total effort–increases with the number of leasing contracts in input-controlled fisheries. If unanticipated by the regulator, the additional pressure on the resource may lead to overfishing and compromise the long-term viability of the industry.

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