Abstract:
The intermediate market for raw fish is characterized by time and space considerations that create significant
quasi-rents between the fisher and the initial processor(s) approached to complete an exchange. This “temporal specificity”
is more pronounced the fewer the number of alternative potential buyers, the more perishable the catch and the more
geographically dispersed the alternative buyers. Owing to the costly strategic behavior that often accompanies large quasirents,
“on-the-spot” negotiations are likely to result in a negative return for a fisher investing in technologies that lead to
pronounced temporal specificity problems. An empirical study by Koss (1999) supports the hypothesis that reciprocal ex
ante specific investment costs are incurred by some processors in order to reduce the probability of ex post holdup. This
paper explores the implications that the above finding has for fishery management policies. In particular, if the goal of
fishery management is to maximize the value of the fishery, then policy should not hinder the use of contractual tools that
serve to accommodate or promote efficient transactions. The dilemma facing policy-makers, however, is that such tools
often simultaneously lead to an increase in the concentration of market power among a small group of processors. Several
existing policy alternatives are evaluated according to their tendency to accommodate or inhibit the use of reciprocal
exposure to promote efficient exchanges.
