Sequential License Buyback Auctions: An Experimental Analysis

Abstract

Abstract Fisheries managers use licenses as a method of capping the size of a fishing industry, but as management goals change and the size of fishery stocks fluctuate, managers may be faced with the decision to buy back licenses. The vast majority of economic literature on license buyback programs focuses on the changes to economic efficiency of the fleet, often citing changes to the composition of fleet size. However, managers have little guidance in deciding how to structure a buyback auction, despite the fact that the auction structure plays a key role in determining which licenses are retired and in the composition of the remaining fleet. With the Texas Park and Wildlife Department's Inshore Shrimp License Buyback Program as a basis for auction design, this research uses three experimental treatments to analyze how individuals respond to various reverse auction structures. In terms of the quickest license expiration, our experiments suggest that fisheries managers should select a binding auction with...