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Are Two Rents Better than None? When Monopoly Harvester Co-ops are Preferred to a Rent Dissipated Resource Sector

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  • Manning, Dale T.
  • Uchida, Hirotsugu

Abstract

This paper evaluates the conditions under which a fish-harvester cooperative (co-op) with monopoly power represents a preferable outcome when compared to a rent dissipated fishery. Currently, United States anti-trust law prevents harvesters from coordinating to restrict output. In a fishery, this coordination can represent an improvement, despite the creation of market power because a monopolist builds the resource stock. We show, analytically, how a monopolist harvester co-op generates both resource and monopoly rent. While the monopolist generates monopoly rent by restricting production to generate higher prices, it also manages the fish stock to lower stock dependent harvesting costs. We demonstrate the conditions under which a monopoly is likely to be favored over rent dissipation. Given that a monopoly can be efficiency-improving in a common property resource sector, policymakers should consider both the costs and benefits of co-op formation in the case of a rent dissipated fishery.

Suggested Citation

  • Manning, Dale T. & Uchida, Hirotsugu, 2014. "Are Two Rents Better than None? When Monopoly Harvester Co-ops are Preferred to a Rent Dissipated Resource Sector," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 171628, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea14:171628
    DOI: 10.22004/ag.econ.171628
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    References listed on IDEAS

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    Cited by:

    1. Staffan Waldo & Frank Jensen & Max Nielsen & Hans Ellefsen & Jónas Hallgrimsson & Cecilia Hammarlund & Øystein Hermansen & John Isaksen, 2016. "Regulating Multiple Externalities: The Case of Nordic Fisheries," Marine Resource Economics, University of Chicago Press, vol. 31(2), pages 233-257.

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