Abstract
AbstractWe study incentives to mislabel output in multispecies fisheries managed by tradeable catch shares. Firms can save quota costs by misreporting species harvested, as seen in criminal proceedings against the Codfather. We show that price elasticities for the abundant species reported in the cheating will be higher for compliant than non‐compliant firms. Using data from the New England groundfish fishery, we test this prediction using a latent class hedonic price equation to identify compliant versus non‐compliant firms. We then estimate multi‐output technologies for compliant and noncompliant firms to identify differences in substitution possibilities. Our empirical results align with theoretical expectations and are robust to placebo tests.
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