Economic Analysis of Social Issues 1st Edition by Alan Grant

Exercise 20

[Related to Application 9.3 on page 190] Read Application 9.3 carefully. It is certainly possible to manage fisheries by establishing a quota system in which catch shares are not transferrable. Why is a system where catch shares are transferrable likely to (a) be more efficient-enabling the same quantity of fish to be caught with fewer resources and (b) provide a stronger incentive for fishermen to collectively catch fewer fish?