TOWARD A MORE COMPLETE MODEL OF INDIVIDUAL TRANSFERABLE FISHING QUOTAS - IMPLICATIONS OF INCORPORATING THE PROCESSING SECTOR

Economic analyses of individual transferable quota (ITQ) fisheries man agement traditionally have focused on the harvesting sector. However, harvester decisions impact the economic performance of co-dependent pr ocessing firms. This paper incorporates both sectors in an analysis of the effect of ITQs on commercial fisheries. Results show that, as a c onsequence of season elongation under a harvester-only allocation of f ishing rights, capital nonmalleability implies that processor quasi-re nts will be redistributed to harvesters. These losses could promote po litical gridlock and jeopardize adoption of an ITQ policy unless they are fully compensated or unless redistribution is avoided by a policy- superior initial allocation of rights to both harvesters and processor s. (C) 1996 Academic Press, Inc.