Abstract
There is a presumption that individual transferable quotas (ITQs) will provide incentives to invest optimally in fishing boats. This paper shows that this is not true when the crew is paid a share of the catch value instead of a parametric wage. This system of remuneration distorts investment incentives in an ITQ system of fisheries management and leads to overinvestment, but on a much smaller scale than open access. This can be corrected with a tax on fish landings, but not with a tax on quota holdings.
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