How Many Instruments Do We Really Need? A First-Best Optimal Solution to Multiple Objectives with Fisheries Regulation
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How Many Instruments Do We Really Need? A First-Best Optimal Solution to Multiple Objectives with Fisheries Regulation. / Elleby, Christian; Jensen, Frank.
Department of Food and Resource Economics, University of Copenhagen, 2018.Research output: Working paper › Research
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TY - UNPB
T1 - How Many Instruments Do We Really Need?
T2 - A First-Best Optimal Solution to Multiple Objectives with Fisheries Regulation
AU - Elleby, Christian
AU - Jensen, Frank
PY - 2018
Y1 - 2018
N2 - Part of the existing economic literature on fisheries regulation focuses on addressing several objectives with one instrument. In an extension of this literature we investigate the following three objectives of fisheries regulation: A) Correcting a stock externality; B) Raising public funds, and; C) Solving problems with uncertainty. We analyze the implications of combining a non-linear tax on harvest and individual transferable quotas to address these three objectives and argue that a tax alone can fulfill all three objectives simultaneously. This result can be related to the theory on a first-best and a second-best optimum which state that the number of objectives must be identical to the number of instruments if a first-best optimum shall be reached. We show that one instrument (a tax based on the size of the harvest in this case) is enough to achieve a first-best optimum.
AB - Part of the existing economic literature on fisheries regulation focuses on addressing several objectives with one instrument. In an extension of this literature we investigate the following three objectives of fisheries regulation: A) Correcting a stock externality; B) Raising public funds, and; C) Solving problems with uncertainty. We analyze the implications of combining a non-linear tax on harvest and individual transferable quotas to address these three objectives and argue that a tax alone can fulfill all three objectives simultaneously. This result can be related to the theory on a first-best and a second-best optimum which state that the number of objectives must be identical to the number of instruments if a first-best optimum shall be reached. We show that one instrument (a tax based on the size of the harvest in this case) is enough to achieve a first-best optimum.
M3 - Working paper
T3 - IFRO Working Paper
BT - How Many Instruments Do We Really Need?
PB - Department of Food and Resource Economics, University of Copenhagen
ER -
ID: 196405606