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Rational Choice of Vessel Sizes under ITQ Schemes when Fish Prices are Uncertain: an Experimental Approach

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  • Employing an experimental approach, we examine whet her the uncertainty on the fish/outputs price affects the choice of vessel sizes of fishers under an ITQ scheme. Our experiment consists of two parts. In the first part, subjects answer ten questions. The purpose is to extract the risk preference of each subject. The second part consists of two stages. Subjects choose a large- or a small-scale vessel (production method) in the first stage. They do not know the fish price with certainty at this point. After this stage is finished, the fish price is announced. Then, in the second stage, they transact their fishing quotas in the quota market. We conducted 8 sessions; 12 subjects participated in each session; and the second part in each session was composed of 10 periods/rounds. We find that the average trading price of quotas converges to the theoretical equilibrium price given the numbers of both types of vessels, although the average trading prices in the first few rounds are clearly higher than the theoretical ones. We also find that the number of large-scale vessels is smaller than that in the Nash equilibrium without any uncertainty on the fish price. Moreover, it is obtained that the higher the degree of risk-aversion of a subject, the more likely it is that s/he chooses a small-scale vessel.
  • KEYWORDS: Frontiers in Economic Modeling Part I, Fisheries economics, Modeling & Economic Theory
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  • Higashida, K., K. Tanaka & S. Managi. Rational Choice of Vessel Sizes under ITQ Schemes when Fish Prices are Uncertain: an Experimental Approach. Visible Possibilities: The Economics of Sustainable Fisheries, Aquaculture and Seafood Trade: Proceedings of the Sixteenth Biennial Conference of the International Institute of Fisheries Economics and Trade, July 16-20, Dar es Salaam, Tanzania. Edited by Ann L. Shriver. International Institute of Fisheries Economics and Trade (IIFET), Corvallis, 2012.
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  • AQUAFISH, USAID, NEPAD Planning and Coordination Agency, Norad, The World Bank, Hyatt Regency Dar es Salaam, NAAFE, World Wildlife Fund, United Nations University Fisheries Training Programme, ICEIDA, JICA, JIFRS, The European Association of Fisheries Economists, International Seafood Sustainability Foundation
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