Dissertation abstract: The experimental analysis of the political economics of fisheries governance

This dissertation focuses on the political economy of fisheries governance. The study develops a formal model of fisheries governance by combining the features of the common pool fishery and the political institution of lobbying; designs a laboratory fishery governance institution and conducts economic experiments to test the hypotheses derived from the formal model. Specifically, the study analyzes how fishing firms invest in efforts to influence fishery regulation and management through voluntary contribution lobbying. The study also analyses and compares contribution and effort behavior in the lobbying and the CPR using data from economic experiments. The results indicate that lobbying to change suboptimal fishery regulations was significantly below the subgame perfect equilibrium prediction and contributions to raise the cap were significantly different than contributions to lower the cap toward the social optimum. Study results show that subjects successfully lobbied to raise inefficiently low fishing quotas, but were unable to lobby to reduce inefficiently high fishing quotas. Detailed analysis of subjects’ contribution and effort behavior suggest that despite the interesting benefit-cost duality between pure public goods and CPRs, the pattern of cooperative behavior in these two social dilemma situations was different and the level of cooperation in the voluntary contribution lobbying experiment was lower than those reported in other public goods experiments. To provide external validity to these experimental findings, the study further analyzes and compares lobbying expenditures in the fishery sector with those in other natural resource industries using field data from the United States. A comparison of actual lobbying expenditures as percentage of valued added shows that lobbying effort in the U.S fishery sector is not significantly different than those in other natural resource industries such as mining and electric utility industries, but the pattern of lobbying is different. Whereas fishing firms lobby through associations or pressure groups, firms in other natural resource industries lobby unilaterally. This observation suggests that differences in industrial structure and incentives influence the pattern of lobbying and the lobbying behavior of firms across industries. The theoretical predictions derived from the formal model of fisheries governance are consistent with our experimental findings and with the field data on lobbying in the US fisheries sector. These findings suggest that heterogeneity drives rent-seeking activities in the US fisheries sector and that fishing firms attempt to circumvent political collective action problems by forming and lobbying through associations of stakeholders with relatively homogenous policy preferences. JEL Classification D22, D72, D78, H41 Advisor: Prof. Jon G. Sutinen     

Regulation of common property resources under private information about resource externalities

Optimal marginal investment incentives and optimal entry regulations are developed for a case where heterogeneous firms exploit a common property natural resource. The government’s objectives are to correct for resource externalities and to tax away the resource rent. Both individual output and efficiency levels are subject to private information, i.e. it is a model with multi-agency, externalities, and countervailing incentives. There are asymmetric information about the net revenue of the firm and the size of the resource externalities that the firm inflicts on the other firms in the industry. The latter implies that external effects are present both in the firms’ net incomes and in the information rents.     

Stackelberg leadership with product differentiation and endogenous entry: some comparative static and limiting results

Allowing for endogenous entry in the traditional Stackelberg setup with product differentiation, leads to reverting of the standard comparative static and limiting results. Unlike in the standard Stackelberg setup with barriers to entry, the leader??s profit increases when the differentiation becomes lower. The reason is that competition becomes tougher when products become more alike, and consequently, fewer firms enter in equilibrium. On the other hand, increasing product differentiation towards its limit results in number of entrants tending to infinity and for very large market, the profit of the leader approaches zero. Thus market structure approaches monopolistic competition, rather than the standard monopoly outcome that occurs with exogenous number of followers.     

Restricted capacity and rent dissipation in a regulated open access fishery

A common strategy for limiting the total annual catch in a fishery is to restrict entry and season length. We examine the results of this strategy when entry limitation amounts to a limit on capital, but fishing firms can vary an unrestricted input, and thereby use the restricted input more intensively. Under these regulatory constraints, fishing firms will earn rents that depend on the elasticity of substitution between restricted and unrestricted inputs. Using simulations with data from the Alaskan pollock fishery, rents and season length are shown to depend on fish and variable input prices, sometimes in surprisingly non-monotonic ways.     

专利技术垄断、仿冒进入与政府管制政策

文章通过构建政府、正版厂商与仿冒厂商三者之间的Stackelberg博弈模型,并考虑仿冒品厂商的市场结构特征和性质,探讨了仿冒厂商进入条件下正版厂商的竞争行为、策略以及社会福利水平的变化.经研究发现:(1)市场中有仿冒厂商进入且政府稽查力度较弱的情况下,正版厂商总会选择大于独占均衡时的产出数量作为竞争的最优策略,并且,正版品的市场均衡价格要低于正版品独占时的市场均衡价格;(2)仿冒品和正版品之间具有相互替代性,但替代程度不同,仿冒品对正版品仅能部分替代,正版品对仿冒品产生完全替代作用;(3)仿冒品的存在有可能对正版厂商的利益产生正面的影响和作用;(4)在没有考虑政府管制成本的情况下,政府采取对仿冒品不予追究,或者采取严格的查处力度都会提高社会的福利水平.     

MARKETS,EXTERNALITIES, AND THE DYNAMIC GAINS OF OPENNESS

Inflows of foreign knowledge are key for developing countries to catch up with the world technology frontier. I construct a model to analyze the entry decisions of foreign firms and the incentives of domestic firms to invest in their own know‐how, given the exposure to foreign ideas and competition. The model embeds two diffusion mechanisms typically considered separately in the literature: externalities and markets. I find that openness allows developing countries to fully catch up only when market transactions dominate the diffusion of ideas. Externalities are never enough to catch up and may lead to losses in income and welfare.     

Foreign direct investment, competition and industrial development in the host country

This paper analyses the impact of foreign direct investment (FDI) on the development of local firms. We focus on two likely effects of FDI: A competition effect which deters entry of domestic firms and positive market externalities which foster the development of local industry. Using a simple theoretical model to illustrate how these forces work we show that the number of domestic firms follows a u-shaped curve, where the competition effect first dominates but is gradually outweighed by positive externalities. Evidence for Ireland tends to support this result. Specifically, applying semi-parametric regression techniques on plant level panel data for the manufacturing sector we find that while the competition effect may have initially deterred local firms’ entry, this initial effect has been outpaced by positive externalities making the overall impact of FDI largely positive for the domestic industry.     

The effects of market structure on industry growth: Rivalrous non-excludable capital

We analyze imperfect competition in dynamic environments where firms use rivalrous but non-excludable industry-specific capital that is provided exogenously. Capital depreciation depends on utilization, so firms influence the evolution of the capital equipment through more or less intensive supply in the final-goods market. Strategic incentives stem from, (i) a dynamic externality, arising due to the non-excludability of the capital stock, leading firms to compete for its use (rivalry), and, (ii) a market externality, leading to the classic Cournot-type supply competition. Comparing alternative market structures, we isolate the effect of these externalities on strategies and industry growth.     

经济集聚中马歇尔外部性的识别-基于中国制造业数据的研究

本文提出了识别经济集聚中马歇尔外部性的方法,并将其应用于中国制造业数据。通过考察制造业集聚水平和产业间专业化分工的协同演进过程,本文一方面发现两者具有替代关系,验证了马歇尔外部性是经济活动空间集聚后果的理论假说;另一方面证实了马歇尔外部性是推动中国制造业空间不断集聚的基本因素。本文还发现市场化改革是实现马歇尔外部性的积极力量。本文的结论为我国企业选址、产业布局和城市发展政策提供了依据。     

Geographical and industrial spillovers in entry decisions across export markets

This article addresses sequential entry decisions in export markets. It focuses on externalities derived from previous export activity in countries close to those for which a potential entry decision is made (geographical spillovers) and externalities derived from previous presence of other firms in the same industry (industrial spillovers). The empirical analysis uses Spanish microdata for the period 2000–2010 in a firm decision model that also integrates country and industry characteristics. The results suggest that these two types of spillovers have a positive effect in explaining entry decisions in new export markets, though both are smaller in magnitude than the effects coming from previous presence in the same specific destination.     

Stackelberg Beats Cournot — On Collusion and Efficiency in Experimental Markets

We report on an experiment designed to compare Stackelberg and Cournot duopoly markets with quantity competition. We implement both a random matching and a fixed-pairs version for each market. Stackelberg markets yield, regardless of the matching scheme, higher outputs than Cournot markets and, thus, higher efficiency. For Cournot markets, we replicate a pattern known from previous experiments. There is stable equilibrium play under random matching and partial collusion under fixed pairs. We also find, for Stackelberg markets, that competition becomes less intense when firms remain in pairs but we find considerable deviations from the subgame perfect equilibrium prediction which can be attributed to an aversion to disadvantageous inequality.     

Non-point source regulation — A self-reporting mechanism

Information feasible regulatory mechanisms (that do not require the regulator to acquire firm level information) have been proposed long ago for stochastic non-point emission problems. These mechanisms do not take polluter cooperation and firm entry–exit incentives simultaneously into account, nor are these issues addressed in an informationally efficient way. In this paper we propose an informationally feasible self-reporting mechanism that is robust to cooperation among polluters while giving participating firms correct abatement incentives as well as giving entry–exit incentives that are correct to a first order approximation.     

Fishery externalities and biodiversity: Trade-offs between the viability of shrimp trawling and the conservation of Frigatebirds in French Guiana

Sustainable management of natural resources, and in particular fisheries, must take into account several conflicting objectives. This is the case in the French Guiana shrimp fishery for which profitability objectives imply a reduction in the fishing activity. On the one hand, this fishery has negative externalities on marine biodiversity due to discards. On the other hand, this fishery has positive externalities on the economy of the local community and interestingly enough on a protected seabird species in the area (the Frigatebird that feeds on discards). In this paper, we examine the viability of that system considering two sustainability objectives: an economic objective in terms of the profitability of the fishing activity, and a conservation objective in terms of the Frigatebird population. For that purpose, we have developed a dynamic model of that bioeconomic system and study here the trade-offs between the two conflicting objectives. It provides a means to quantify the necessary give and takes involving the economic and ecological objectives that would ensure a viable management solution. Our study confirms the relevance of the viability approach to address natural resource management issues, which should lead to the development of new tools for the arbitration of conflicting sustainability objectives. In particular, such tools could be used as a quantitative basis for cost–benefit analysis taking into account environmental externalities.     

Fishery externalities and biodiversity: Trade-offs between the viability of shrimp trawling and the conservation of Frigatebirds in French Guiana

Sustainable management of natural resources, and in particular fisheries, must take into account several conflicting objectives. This is the case in the French Guiana shrimp fishery for which profitability objectives imply a reduction in the fishing activity. On the one hand, this fishery has negative externalities on marine biodiversity due to discards. On the other hand, this fishery has positive externalities on the economy of the local community and interestingly enough on a protected seabird species in the area (the Frigatebird that feeds on discards). In this paper, we examine the viability of that system considering two sustainability objectives: an economic objective in terms of the profitability of the fishing activity, and a conservation objective in terms of the Frigatebird population. For that purpose, we have developed a dynamic model of that bioeconomic system and study here the trade-offs between the two conflicting objectives. It provides a means to quantify the necessary give and takes involving the economic and ecological objectives that would ensure a viable management solution. Our study confirms the relevance of the viability approach to address natural resource management issues, which should lead to the development of new tools for the arbitration of conflicting sustainability objectives. In particular, such tools could be used as a quantitative basis for cost–benefit analysis taking into account environmental externalities.     

Transferable quotas,enforcement costs and typical firms: An empirical application to the Norwegian trawler fleet

An alternative to traditional regulations of fisheries to avoid rent dissipation is the use of individual transferable quotas (ITQ _s ) where prices in the quota market provide the necessary information to owners of harvest rights to contract with each other. However, even under such a decentralized regime, information on the underlying technology of the fishing vessels is also necessary. First, since most fisheries consist of many interrelated production processes, in order to avoid rent dissipation by discarding wrong output mix etc., the structure of production in the multispecies fishery must be known to design a proper quota system. Second, an ITQ system may create incentives for misreporting by understating the actual catch. This may especially be the case where the expected degree of self-enforcement is low. The paper proposes a way to reduce the information requirements under regulation with asymmetric information by constructing a typical firm and comparing performance for the other vessels to this firm. Based on the typical firm, and if the industry is relatively homogenous, the performance and hence catch of any other firm in the industry can be predicted within a certain range. Further, the paper applies this idea to the Norwegian trawler fleet to assess the production structure in terms of jointness, input-output separability, and the supply and demand elasticities for the fishing firms. This information characterizes the fishery and thus how the quota system may be designed and how to construct a yardstick in order to reduce the enforcement cost under a decentralized regulation of ITQs.The authors would like to thank Trond Bjørndal, Røgnvaldur Hannesson, Ola Flaaten and two referees for useful comments and suggestions.     

Pre-commercial procurement,procurement of innovative solutions and innovation partnerships in the EU: rationale and strategy

We discuss public procurement instruments for acquiring innovation, focusing on the European Pre-commercial Procurement, Procurement of Innovative Solutions and Innovation Partnerships. We analyse, in particular, how firms’ innovation incentives are affected by: (i) economies of scope and externalities between R&D and large-scale production; (ii) the degree of specificity of the innovation; (iii) the presence of Small and Medium Enterprises in the market and the level of market competition; (iv) the risk of market foreclosure and supplier lock-in. Our study contributes to the literature on incentives in demand-side innovation policy by tapping into the contractual design features and by offering relevant implications for academics and policy-makers.     

Enterprise restructuring and bank competition in transition economies

We investigate how bank competition affects the efficiency of credit allocation, using a model of spatial competition. Our analysis shows that bad loans are more likely the larger the number of banks competing for customers. We study further how many banks will be active if market entry is not regulated. Free entry can induce too much entry and thus too many bad loans compared to the social optimum. Finally we analyse how bank competition affects the restructuring efforts of firms. We find that restructuring has positive externalities which give rise to multiple equilibria, with either much or little restructuring activity.
JEL classification: D43, G21, G34, L13, P31, P34.     

Preemptive entry in differentiated product markets

Summary. Models of spatial competition are typically static, and exhibit multiple free-entry equilibria. Incumbent firms can earn rents in equilibrium because any potential entrant expects a significantly lower market share (since it must fit into a niche between incumbent firms) along with fiercer price competition. Previous research has usually concentrated on the zero-profit equilibrium, at which there is normally excessive entry, and so an entry tax would improve the allocation of resources. At the other extreme, the equilibrium with the greatest rent per firm normally entails insufficient entry, so an entry subsidy should be prescribed. A model of sequential firm entry (with an exogenous order of moves) resolves the multiplicity problem but raises a new difficulty: firms that enter earlier can expect higher spatial rents, and so firms prefer to be earlier in the entry order. This tension disappears when firms can compete for entry positions. We therefore suppose that firms can commit capital early to the market in order to lay claim to a particular location. This temporal competition dissipates spatial rents in equilibrium and justifies the sequential move structure. However, the policy implications are quite different once time is introduced. An atemporal analysis of the sequential entry process would prescribe an entry subsidy, but once proper account is taken of the entry dynamics, a tax may be preferable. Received: April 26, 1999; revised version: September 22, 1999     

战略性经营者激励选择与国际市场份额竞争

本文首先用具有线性需求和规模收益不变生产技术的Cournot双头模型来刻画国际市场份额竞争。指出 ,如果参与国际竞争的本国企业是所有权与经营权分离的企业 ,那么 ,无论竞争对手是否是所有权与经营权分离的企业 ,本国企业所有者总是有积极性操纵经营者的激励 ,特别的 ,在只有本国企业作出单边激励选择的情况下 ,这种操纵可以使本国企业生产Stackelberg领先者产量成为可以置信的承诺。它在这里所起到的作用是与出口补贴在战略性贸易政策分析中所起到的作用相一致的。如果考虑到从过去的GATT到现在的WTO都规定政府不得以任何形式参与国际竞争 ,这个结论就更有趣了。因为无须政府帮助 ,本国企业所有者凭借自身的力量就能实现有利于本国企业的竞争结果。这种民间对政府的替代是有意义的。在双边激励选择的情况下 ,两国企业陷入了“囚徒困境”。本国企业只有诉诸于本国政府对国际市场的干预 ,才能重新获得Stackelberg领先者的地位 ;但与对它的传统理解相比 ,这种地位已然弱化。最后 ,我们还证明 ,根据相当一般的条件 ,所有者决定的最优经营者激励只与竞争类型 (数量竞争还是价格竞争 )有关 ,而与企业的产品类型 (替代品还是互补品 )无关。