Scandinavian Working Papers in Economics
Discussion Papers on Economics,
University of Southern Denmark, Department of Economics
No 18/2014: On International Fisheries Agreements, Entry Deterrence and Ecological Uncertainty
Hans Ellefsen, Lone Grønbæk Kronbak () and Lars Ravn-Jonsen
Additional contact information
Hans Ellefsen: University of Faroe Islands, Postal: J.C. Svabos gøta 14, FO-100 Tórshavn, Faroe Islands
Lone Grønbæk Kronbak: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
Lars Ravn-Jonsen: Department of Environmental and Business Economics, Postal: University of Southern Denmark, Niels Bohrs Vej 9, DK-6700 Esbjerg, Denmark
Abstract: From a game theoretical perspective, a prerequisite for an international fishery agreement (IFA) to be stable is that parties expect their benefits from joining the agreement to exceed the benefits from free riding on the agreement, and parties only comply with the agreement as long as this is true. The agreement, therefore, implicitly builds on an expectation of the ecological integrity of the natural resource. Typically, the game theoretical models assume that all parties have the same (often perfect) information of the resource and that the exploitation is an equilibrium use of the stock. As stated by experts in natural science, the fish ecology still has many open questions, e.g. how to predict population dynamics, migration patterns, food availability, etc. In some cases, parties disagree about the state, abundance, and migration of a stock, which can significantly disturb the possibilities of reaching an agreement for exploitation of the stock. This paper develops a model and applies it to the North-East Atlantic mackerel fishery, in order to analyze IFA under different ecological scenarios, and also combines the model with the economic theory of entry deterrence. The model is empirically used to determine whether the original parties to the agreement have an advantage in that the results from fishing the stock down to a smaller size prevents another party from entering into the fishery. The paper presents a novel method for illustrating the obstacles that have made an agreement for the North-East Atlantic mackerel so difficult to achieve.
Keywords: Cooperative game; Nash game; Entry deterrence; Stability of sharing rule; Bio-economic modeling; Ecological uncertainty
24 pages, December 1, 2014
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