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In Weitzman (1974) the choice between price and quantity regulation under imperfect information is analysed. It is shown that the choice between the two regulatory instruments depends on the sign of the sum of the curvatures of the cost and benefit functions. If the marginal benefit function is steep and the marginal cost function is flat quantity regulation is preferred over price regulation, while price regulation is preferred over quantity regulation if the marginal benefit function is flat and the marginal cost function is steep. The results in Weitzman (1974) are sometimes quoted in studies of fisheries management. In this paper an analysis of conditions for generalising the Weitzman result to fisheries economics is presented. It is shown that the result can be generalised if the cost function is additively separable in stock size and catches. This leads to the conclusion that the results hold for a schooling fishery. However, for a search fishery the condition that the cost function must be additively separable is seldom fulfilled and quotation of the classical article is therefore not reasonable. A further result is that for a schooling fishery, taxes are likely to be preferred over individual transferable quotas in the case where there is imperfect information about costs. The reason is that the marginal cost function is likely to be steeper than the demand function. In the light of this result, the fact that individual quotas regulate over 55 fisheries while taxes regulate none is surprising.

A purpose of this paper is to give a critical review of the total allowable catch (TAC) policy within the European Union (the EU) for cod in the North Sea. The actual TACs are compared with the biological recommendations about the TAC and the bio-economic optimal TAC. It is shown that the actual TAC follows biological recommendations but that bio-economic principles are poorly reflected in the TAC. The Danish regulatory policy for cod in the North Sea (rations) is analysed by means of a bio-economic model. It is shown that the information requirements needed for conducting a bio-economic optimal allocation of rations are considerable. Furthermore, the actual allocation scheme for rations distribute too high a share of the EU determined Danish quota to small vessels. Taxes and individual transferable quotas (ITQs) combined with bio-economic optimal TACs is presented as an alternative to the existing policy.

AbstractThe existing fisheries economics literature analyzes compliance problems by treating the fishing firm as one cohesive unit, but in many cases violations are committed by agents acting on behalf of a firm. To account for this, we analyze the principal–agent relationship within the fishing firm. In the case where the firm directly benefits from illegal fishing, the firm must induce its crew to violate regulations through the incentive scheme. Within this framework, we analyze how the allocation of liability between fishing firms and crew affects quota violations and the ability to design a socially efficient fisheries policy. We show that without wage frictions, it does not matter who is held liable. However, under the commonly used share systems of remuneration, crew liability generally yields a more efficient outcome than firm liability. Furthermore, asset restrictions may affect the outcome under various liability rules.

AbstractIn this article, we conduct a number of benefit–cost analyses to clarify whether the establishment of ragweed in Denmark should be prevented (pure prevention) or if the damage from this invasive species should be mitigated (pure mitigation). The main impact of the establishment of ragweed in Denmark would be a substantial increase in the number of allergy cases, which we use as a measure of the physical damage from this species. As valuation methods, we use both the cost-of-illness and benefit transfer methods to quantify the total gross benefits of these two policy actions. Based on the idea of an invasion function, we identify the total and average net benefits under both prevention and mitigation and find that all are significantly positive regardless of the valuation method. Therefore, both prevention and mitigation are beneficial policy actions, but the total and average net benefits under mitigation are larger than those under prevention in all the scenarios we consider. This finding implies that the former policy action is more beneficial. Despite this result, we propose that prevention, not mitigation, may be the proper policy because of information externalities, altruistic preferences, possible catastrophic events, and ethical considerations.

AbstractIn this paper, we conduct a cost-benefit analysis (CBA) of five alternative management strategies for red deer in Denmark: free harvest, trophy hunting, maximum harvest and two cases for natural demographic population compositions. To capture the outcome under each strategy we use a biological sex- and age-structured population model. The net benefit function includes meat values, recreational values, browsing damage costs and traffic damage costs and these values and costs are assumed to differ for the various sex and age classes of red deer. We show that the maximum harvest strategy leads to a reasonably high positive total net benefit, while the free harvest strategy yields a small positive net benefit. On the other hand, the trophy hunting strategy generates a high negative net benefit, while small negative net benefits are obtained under the two strategies for natural demographic population compositions.