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Economics and Social Sciences Research Program

Spatial Competition with Changing Market Institutions

Competition across space can be fundamentally altered by changes in market institutions such as the creation of catch shares or individual fishing quotas. In this research, we propose a framework that integrates market-altering policy changes in the spatial analysis of competitive behavior and incorporates endogenous breaks in explanatory variables for spatial panel datasets. This research fills a gap between work focusing on spatial price responsiveness of agents and work on changes in market regulations that affect competition.

We apply the framework to an important current fishery managment policy to explore how a change from aggregate to individual fishing quotas affects the spatial price responsiveness of fish processors for the Alaska sablefish fishery. We find that processors are more responsive to each otherís prices after rationalization.

What is the policy implication of these findings for fisheries management? The application has important policy ramifications as catch shares represent one of the most important examples of natural resource economics being used in resource management. Better accounting for the distributional impacts of this resource management policy is a valuable contribution that will enable policymakers to better anticipate the distributional impacts of the creation of catch shares in other fisheries that are currently considering this policy change. In some cases, publicly expressed concerns about distribution may be merely an effort to seek rents or quota share, but our results suggest that the concern that catch shares will impact the competitive pressures faced by processors is well-founded.

A case-by-case examination is required to determine the degree to which this is likely, but there is certainly the possibility that after catch share implementation, processors in neighboring communities will compete more aggressively. Whether or not additional competition is perceived to be beneficial will largely be based on how equitable the current distribution of rents between the processing and harvesting sectors is perceived to be.

By Harrison Fell and Alan Haynie

The Economic Value of Marine Recreational Salmon Fishing Trips in Southeast Alaska

Few studies have examined the net economic value of Alaska's salmon sport fisheries. Of the existing studies, most tend to focus on fisheries of Southcentral Alaska rather than Southeast Alaska, and none use recent data on fishing behavior. Moreover, past studies generally used empirical frameworks that are generally considered less flexible compared to recreation demand models used today. To fill this gap, economic values of fishing opportunities and changes in harvest rates are estimated for single-day private boat saltwater fishing trips for king (Chinook) and silver (coho) salmon by Southeast Alaska anglers using a recreation demand model of trip frequency and participation that jointly estimates anglers' opportunity costs of time.

The data used in the analysis are from a national mail survey conducted during 2007 of people who purchased sport fishing licenses in Alaska in 2006. The survey was developed with input collected through several focus groups and cognitive interviews with Alaska anglers, as well as from fishery managers. The survey is described, and the data collected summarized, in Lew, Lee, and Larson (2010), on the AFSC website at The focus in this analysis is on people who took single-day trips using private boats in Southeast Alaska because it is the dominant type of trip taken by residents of that region.

In the model, the decision of where to fish is assumed to depend upon the time and money cost of traveling to the site and the angler's expectation of how many fish will be harvested at each site under consideration. Two formulations of the harvest rate variables are used that differ based upon whether or not information available on the species targeted by the angler is used to define which harvest rates are relevant to trip choices.

Results suggest that the model that includes harvest rates for both king and silver salmon for everyone, regardless of their individual targeting strategies, was preferred on the grounds of goodness of fit statistics. The preferred model leads to mean economic value estimates of approximately $45 for a fishing trip, which translates to $2,250 for a season of salmon fishing. Marginal values associated with changes in harvest rates are also calculated for a variety of harvest changes. For example, the mean (taken across anglers) value for a 50% increase in the king salmon harvest rate alone is $7, and for a 100% increase is $16. For 50% and 100% decreases in king salmon harvest rates, the change in the value of a trip is -$6 and -$11, respectively.

By Dan Lew and Doug Larson

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