NCPA - National Center for Policy Analysis

A CASE WHERE CARTELS WORK

April 20, 2005

Fishing association cartels have been recognized by courts as a violation of federal antitrust laws, but they provide a better alternative to resource conservation than government regulation, says Jonathan Adler (Cato Institute).

Government regulation of the fishing industry has been ineffective and provides little incentive for fishers to take measures to ensure a long-term supply of fish:

  • Seasonal limitations encourage fishers to catch as many fish as possible before the fishery is closed.
  • Mandates requiring the use of less-efficient equipment encourage fishers to invest in additional boats and gear to compensate for efficiency losses.
  • Efforts to limit the number of boats in a fishery simply encourage more effort from existing boats and the incentive to over fish.
  • In fact, the National Marine Fisheries Service reports that the government manages 932 fish stocks, but the status of 700 of them is unknown.

Fishing cartels allow fishing boat owners to set up a cooperative that establishes the set a minimum price for fish, with local canneries agreeing to purchase fish only from the association. The practice restricts entry into the fishing industry and sometimes -- but not always -- sets prices above the market. But it has been effective in preventing over fishing and keeping fish supplies sustainable over the long-term.

But courts have struck down such measures, even when they prove to work at conserving resources. While fishing cartels may not be as economically desirable as individual privatization of resources through tradable fishing quotas, they do a much better job than the current bureaucratic regime, says Adler.

Source: Jonathan H. Adler, "Conservation Cartels." Regulation, Winter 2004-2005, Cato Institute.

For text:

http://www.cato.org/pubs/regulation/regv27n4/v27n4-5.pdf

 

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