Efficiency controls and the captured fishery regulator

Rent dissipation in open access fisheries is well studied (Gordon 1954; Homans and Wilen 1997). Due in part to industry pressure, fishery regulators have historically been reluctant or unable to limit entry or directly regulate harvest, and have relied instead on efficiency restrictions (technology restrictions and season lengths) to achieve management goals. We study the situation when a regulator is ”captured” in the sense that he cannot directly control entry, but acts in the representative fisher’s best interest. Incumbent fishers are faced with the problem that potential entrants appear just like incumbent; current profits must be weighed against the incentive for entry. We find that when the regulator is captured by industry members, he unambiguously allows overfishing reaching a lower stock and higher effort than is socially optimal. This steady state has zero rents, but a higher stock and effort than the open access equilibrium. JEL Classification: Q22, Q28