Market Power, Industrial Organization and Tradeable Quotas

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Abstract

Individual Transferable Quotas (ITQs) were introduced into the Mid-Atlantic Surf Clam and Ocean Quahog fishery to reduce over-capitalization while conserving clam populations. Because the number of operators in the fishery declined drastically since the introduction of this policy, there is concern about its effect on competitiveness. This paper utilizes Bertrand Pricing Models to show that monopoly power is absent from the surf clam and ocean quahog markets. Concentration ratios, Lorenz curves and Gini Coefficients estimated for the fishery for periods before and after ITQ introduction support the results of the Bertrand model.

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