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Regulations, Risk, and Rent Seeking Behaviour with application to fisheries

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  • This paper seeks to address how political risk influences behaviour, in particular rent seeking behaviour. Such risk is important in many industries, which posts challenges both for policy makers and economic agents. This paper studies how political uncertainty affects rent seeking, and what level of political uncertainty is optimal for society. We find that if rent seeking expenditures are considered to be a pure loss to society, a higher level of political uncertainty might be beneficial to discourage rent seeking. On the other hand, high risk aversion among the agents decreases the optimal level of uncertainty, as risk averse agents suffer a higher loss in utility from a high uncertainty. As a case study, we consider fishing and fish-farming, where some of the input variables are different, yet the fundamental problem is the same. Fish-farmers and fishers seem to be considerably less risk averse than farmers. This implies that the social cost of high uncertainty is less in these industries, and, ceteris paribus, a higher optimal level of political uncertainty.
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  • Brandt, Urs and Ole Jakob Bergfjord. 2008. Regulations, Risk, and Rent Seeking Behaviour with application to fisheries. 10 pages. In: Proceedings of the Fourteenth Biennial Conference of the International Institute of Fisheries Economics & Trade, July 22-25, 2008, Nha Trang, Vietnam: Achieving a Sustainable Future: Managing Aquaculture, Fishing, Trade and Development. Compiled by Ann L. Shriver. International Institute of Fisheries Economics & Trade, Corvallis, Oregon, USA, 2008.
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  • US National Oceanic and Atmospheric Administration (NOAA) Fisheries Division, The Department of Fisheries and Oceans, Canada; Aquaculture CRSP and AquaFish CRSP; Minh Phu Seafood Corporation; Vietnam Datacommunication Company (VDC); Camau Frozen Seafood Processing Import Export Corporation (Camimex); Long Sinh Limited Company; Mai Linh Group and Nam Viet Corporation.
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