A NOTE ON MARKET POWER IN ITQ FISHERIES

Individual transferable quotas, ITQs, in fisheries are analogous to transferable pollution permits in environmental policy. However, they are different in that the right to produce is for the final product, the fish, whereas pollution permits are for a non-market joint product (i.e., sulfur dioxide) of the good produced for sale. In both cases, the actual economic efficiency effects of creating the property rights depend upon the workings of the market for both the final product and the rights. There has been considerable work on market failures for pollution permits, and this paper extends the analysis to ITQs. It is shown that the difference between pollution permits and ITQs can change the type and occurrence of failure in the market for the final product, but it does not affect the potential for failure in the market for permits. © 1991.