Template-Type: ReDIF-Paper 1.0
Author-Name: Christian Elleby
Author-Name-First: Christian
Author-Name-Last: Elleby
Author-Email: christian@ifro.ku.dk
Author-Workplace-Name: Department of Food and Resource Economics, University of Copenhagen
Author-Name: Frank Jensen
Author-Name-First: Frank
Author-Name-Last: Jensen
Author-Email: fje@ifro.ku.dk
Author-Workplace-Name: Department of Food and Resource Economics, University of Copenhagen
Title: How Many Instruments Do We Really Need? A First-Best Optimal Solution to Multiple Objectives with Fisheries Regulation
Abstract: Part of the existing economic literature on fisheries regulation focuses on addressing several objectives with one instrument. In an extension of this literature we investigate the following three objectives of fisheries regulation: A) Correcting a stock externality; B) Raising public funds, and; C) Solving problems with uncertainty. We analyze the implications of combining a non-linear tax on harvest and individual transferable quotas to address these three objectives and argue that a tax alone can fulfill all three objectives simultaneously. This result can be related to the theory on a first-best and a second-best optimum which state that the number of objectives must be identical to the number of instruments if a first-best optimum shall be reached. We show that one instrument (a tax based on the size of the harvest in this case) is enough to achieve a first-best optimum.
Length: 30 pages
Creation-Date: 2018-05
File-URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2018/IFRO_WP_2018_05.pdf
File-Format: Application/pdf
Number: 2018/05
Classification-JEL: Q22, D80, H20, H23
Keywords: Stock externalities, double-dividend, uncertainty, taxes, quotas
Handle: RePEc:foi:wpaper:2018_05