Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 20/2015: A Corporate-Crime Perspective on Fisheries: Liability Rules and Non-Compliance.

Frank Jensen () and Linda Nøstbakken ()
Additional contact information
Frank Jensen: University of Copenhagen, Postal: Department of Food and Resource Economics, University of Copenhagen, Denmark
Linda Nøstbakken: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway

Abstract: The existing fisheries economics literature analyzes compliance problems by treating the fishing firm as one cohesive unit, but in many cases, violations are committed by agents acting on behalf of a firm. To account for this, we analyze the principal-agent relationship within the fishing firm. In the case where the firm directly benefits from illegal fishing, the firm must induce its crew to violate regulations through the incentive scheme. Within this framework, we analyze how the allocation of liability between fishing firms and crew affects quota violations and the ability to design a socially efficient fisheries policy. We show that without wage frictions, it does not matter whom is held liable. However, under the commonly used share systems of remuneration, crew liability generally yields a more efficient outcome than firm liability. Furthermore, asset restrictions may affect the outcome under various liability rules.

Keywords: Fisheries; enforcement; quota compliance; liability; principal-agent problem.

JEL-codes: Q20

50 pages, August 14, 2015

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