The Role of Capacity Regulations in Compliance Public Deposited

http://ir.library.oregonstate.edu/concern/conference_proceedings_or_journals/vh53x1426

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  • Production quotas can restore efficiency in industries characterized by production externalities, such as resource industries and industries with environmental regulations. However, with imperfect quota enforcement, firms may have incentives to build up excess capacity relative to their quotas. Firms with excess capacity may, in turn, have stronger incentives to violate quotas. We investigate the relationship between enforcement, compliance and capital levels in the short and long run. In the short run, excess capacity leads to increased illegal production but a well-functioning quota market may alleviate the problem. Furthermore, we show that the tougher the enforcement, the lower the firms' production capacity. With tradable quotas, the quota price strengthens the effect of tougher (or weaker) enforcement. At the aggregate level production quotas do not fully internalize the production externality when enforcement is imperfect. In such situations, additional management instruments are required to correct the firms' incentives to build up excess capacity, which exacerbate the non-compliance problem.
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  • Lazkano, I. & Nostbakken, L. The Role of Capacity Regulations in Compliance. In: 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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  • description.provenance : Submitted by Martin Eberle Jr (eberlem@onid.orst.edu) on 2013-11-01T21:20:44Z No. of bitstreams: 1 Lazkano-261.pdf: 12829 bytes, checksum: adaadf32cc915bcc8009b68e3ad9155b (MD5)
  • description.provenance : Approved for entry into archive by Janet Webster(janet.webster@oregonstate.edu) on 2013-11-05T17:11:23Z (GMT) No. of bitstreams: 1 Lazkano-261.pdf: 12829 bytes, checksum: adaadf32cc915bcc8009b68e3ad9155b (MD5)
  • description.provenance : Made available in DSpace on 2013-11-05T17:11:23Z (GMT). No. of bitstreams: 1 Lazkano-261.pdf: 12829 bytes, checksum: adaadf32cc915bcc8009b68e3ad9155b (MD5) Previous issue date: 2012

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