The Incentive Structure of Impure Public Good Provision - The Case of International Fisheries
Paper number: 11/03
Paper Category: Discussion Paper
Michael Finus, Raoul Schneider and Pedro Pintassilgo
We argue that international fisheries are a prime example to study the impact of multiple characteristics on the incentive structure of impure public good provision. The degree of technical excludability is related to the pattern of fish migration, the degree of socially constructed excludability is captured by the design of international law and the degree of rivalry is reflected by the growth rate of the resource. We construct a bioeconomic model, including the high seas and exclusive economic zones in order to study the incentives to form stable fully or partially cooperative agreements. We show that the spatial allocation of property rights is crucial for the success of cooperation as long as technical excludability is sufficiently high. Moreover, we show how economic and ecological factors influence the success of cooperation.