Valcu, Adriana; Weninger, Quinn

WP #11009, May 2011

We present a general, dynamic model of within-season harvesting competition in a fishery managed with individual transferable quotas. Markov-Perfect equilibrium harvesting and quota purchase strategies are derived using numerical collocation methods. We identify rent loss caused by a heterogeneous-in-value fish stock, congestion on the fishing ground, revenue competition and stock uncertainty. Our results show that biological, technological and market conditions under which rents will be dissipated in a standard individual transferable quota program are fairly special. These findings provide new insights for designing rights-based programs capable of generating resource rent in marine fisheries.

JEL Classification: Q2

Keywords: Markov Perfect Nash equilibrium; individual transferable quotas, production externalities, resource rent.

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