Individual Transferable Quota Markets and Investment Decisions in the Fixed Gear Sablefish Industry

This paper presents an ex ante analysis of an individual transferable quota (ITQ) program imposed on one species in a multispecies fishery. Utilizing mathematical programming, pseudo data, and Tobit regression, market demand for quota and prospective gains in economic rent and efficiency gains from quota trade are assessed for the pot and longline sablefish fleet off the Pacific coast of the United States. Incentives for disinvestment and industry exit after quota exchange, implications for structure of the industry and ITQ market, and policy implications are examined.