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Welfare implications of EU enlargement: the case of East Baltic cod

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  • Recent research has warned that liberalising trade in capture fishery products originating from inefficient managed fisheries might cause over-exploitation, reduced fish stocks and thereby reduced steady state welfare. This paper qualifies the warning in a case study of the East Baltic cod market by introducing a quantitative supply model of the fishery with year classes. Welfare effects of trade liberalisation are identified taking minimum size limits and minimum mesh sizes into account and it is shown that even though liberalising trade supplied by such a fishery might cause long steady state welfare reductions in the supplier countries, this welfare reduction is almost solely related to economic over-exploitation through too large fishing costs more than to biological over-exploitation. Thus, the welfare effects of trade liberalisation are generally small and in particular for fishing mortalities well above the maximum sustainable yield. The consequence is that the argument that warns against trade liberalisation in certain situations gains less validity and conventional wisdom following from the Neo-classical theoretical tradition regains validity at several and probably most fish markets globally.
  • Keywords: bio-economic model, Theoretical and Empirical Bio-Economic Analysis, Fisheries Economics, fisheries management, backward-bending supply, Trade liberalisation
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  • Nielsen, Max. 2004. Welfare implications of EU enlargement: the case of East Baltic cod. In: Proceedings of the Twelfth Biennial Conference of the International Institute of Fisheries Economics & Trade, July 20-30, 2004, Tokyo, Japan: What are Responsible Fisheries? Compiled by Ann L. Shriver. International Institute of Fisheries Economics & Trade, Corvallis, Oregon, USA, 2004. CD ROM. ISBN 0-9763432-0-7
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