Abstract
In 2010, the Northeast United States groundfish fishery adopted a catch share system in which Annual Catch Entitlements (quota) are allocated to groups of firms, known as sectors. The quota market has many features that differ from an ideal market: trades are facilitated by sector managers, completed trades are not easily seen by all, and both package and barter trades are common. This paper examines quota prices using a two stage econometric model. In the first stage, transactions data are used to estimate the prices of individual stocks of quota. In the second stage, a hurdle model is used to understand the determinants of quota prices. Despite the many quirks inherent in groundfish management, quota prices are affected by fundamentals in reasonable ways: increases in output prices and decreases in quota available both increase quota prices. Increases in monitoring rates also increase quota prices, evidence that at least some of the groundfish fleet is not always compliant with fishing regulations when not observed.
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