Reciprocal Exposure and Holdup in Fisheries: Implications for Fishery Management Policy
By Patricia Koss
ABSTRACT
An empirical study undertaken by Koss (1999) suggests that, owing to the temporal specific investments undertaken by some fishers, reciprocal ex ante specific investment costs are incurred by some processors in order to reduce the probability of ex post holdup. 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 quasi-rents, "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. A study of the 1988 British Columbia salmon, herring, halibut and sablefish fisheries supports the hypothesis that processors make ex ante reciprocal investments in these harvesting technologies in order to induce fishers to employ such technologies. Reciprocal investments take the form of full or partial vessel ownership by the processor, vessel financing arrangements, and processor provision of moorage, storage space and vessel maintenance.
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 and prospective policy alternatives will be evaluated according to their tendency to accommodate or inhibit the use of reciprocal exposure to promote efficient exchanges.
 Seafood Markets and Fishery Management: Conceptual and Empirical Issues
View Full Paper (PDF file)
|
