Conference Agenda

In some situations, traditional contractual practices such as compensation schemes are optimal in specific industrial contexts, but they become detrimental once new regulations are being introduced in these industries. This paper analyzes the case of profit-sharing in commercial fisheries (lay system) in a situation where Individual Transferable Quotas (ITQs) are being introduced. Our analysis considers a fishery subject to some congestive frictions where fishing crew are being paid with lays. In an ITQ fishery the main measure for fishing performance is known in advance and is fixed. However, lays can still depend upon catch levels if new quotas are acquired or leased by the vessel's owner. It follows that if a vessel wants to increase its harvest levels, it must purchase or lease (at a cost) new quotas from other vessels. An important question is then whether the possibility to compensate crew members with lays (as opposed to regular wage) can enhance the efficiency of tradeable quotas?

Our model analysis reveals that lay contracts reduce the efficiency of ITQs as it reduces quota leasing, and increases the equilibrium leasing price. In other words, letting vessels' owners issue profit-sharing partnerships creates a Pareto inferior situation in which the ITQ fishery as a whole is worse off.

Fisheries face two distinct market failures: the well-documented "race-to-fish" problem of resource overexploitation, and the less studied problem of price depression from uncoordinated landing timing. When vessels arrive at port simultaneously, concentrated landings overwhelm processing capacity and depress ex-vessel prices—a form of rent dissipation that persists even under quantity-based management systems. We investigate whether coordinating landing timing can mitigate this temporal market failure. Using a structural auction model, we analyze Japan's Kesennuma offshore longline fishery, which implemented coordinated landing schedules following the 2011 tsunami. Using transaction-level data from swordfish auctions spanning 2009-2019, structural estimation reveals that bidder valuations respond significantly to landing timing, with longer intervals between landings associated with higher prices. Counterfactual simulations demonstrate that landing coordination generates approximately 1% higher auction prices—modest but statistically significant efficiency gains without reducing total supply. These findings provide first empirical evidence that simple institutional coordination can address temporal market failures, complementing quantity-based management tools.

This paper presents research on the value of recreation-related services. Income measures the flow of value evaluated at market prices. Most nonmarket valuation studies, however, report welfare measures rather than values compatible with conventional income accounts. We demonstrate how to estimate compatible measures for a recreational resource in a multi-site setting using the simulated exchange value (SEV) method. We derive the exchange value using a random utility model that considers multiple sites and the decision to not take a trip. We construct a panel of exchange values by applying the method to 20 years of annualized recreational fishing statistics from Lake Michigan. The annual exchange value is approximately $130 million, which is approximately 64% of consumer surplus from the study area.

Climate-driven non-stationarity challenges fisheries management approaches that rely on stable historical relationships between productivity and environmental conditions. Abrupt regime shifts can fundamentally alter stock–recruitment dynamics, which can alter the performance of fixed or slowly updated harvest rules. While economic escapement rules are often shown to outperform biological benchmarks under perfect information, their performance under realistic constraints on regime-shift detection and management response is not well understood. We evaluate the welfare performance of three widely used harvest control rules—maximum sustainable yield (MSY) escapement, deterministic economic escapement under stationary productivity, and stochastic economic escapement that anticipates regime shifts—when management responds to productivity changes with explicit delays. Using pink salmon (Oncorhynchus gorbuscha) in Prince William Sound, we parameterize distinct pre- and post-regime productivity functions associated with the 1988–1989 climate shift and exploit biologically independent odd- and even-year broodlines managed under identical institutional rules. Management delays reflect realistic constraints arising from monitoring costs, statistical detection lags, and regulatory inertia. We find three key results. First, when regime shifts are detected and incorporated promptly, economic escapement rules substantially increase expected net benefits—by 36–46% relative to MSY—by aligning harvest decisions with current productivity. Second, the insurance value of anticipatory economic management declines as detection and response delays increase, reducing expected welfare gains. Third, delayed management responses significantly increases the frequency of extreme low-welfare outcomes, raising the likelihood of fishery disaster declarations and public intervention. Under longer delays, MSY escapement exhibits greater robustness and more stable welfare outcomes despite lower peak efficiency. These findings reveal a fundamental trade-off between economic efficiency and robustness in non-stationary resource systems. The welfare gains from economically optimal harvest rules depend critically on investments in monitoring and governance capacity, implying that optimal policy design ought to jointly consider harvest rules and the institutions that support timely information and responses.