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Quota Trading and Profitability: Theoretical Models and Applications to Danish Fisheries

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  • Andersen, Jesper Levring
  • Bogetoft, Peter

Abstract

Using Data Envelopment Analysis (DEA), we provide a framework to analyze the potential gains from quota trading. We compare the industry profit and structure before and after a free trade reallocation of production quotas. The effects of tradable production quotas depend on several technological and behavioral characteristics, including the ability to learn best practice (catch-up) and the ability to change the input and output composition (mix). To illustrate the usefulness of our approach, we analyze a dataset from the Danish fishery. We study the industry profit and structure under each of four sets of technological and behavioral characteristics.

Suggested Citation

  • Andersen, Jesper Levring & Bogetoft, Peter, 2003. "Quota Trading and Profitability: Theoretical Models and Applications to Danish Fisheries," Unit of Economics Working Papers 24180, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
    • Handle: RePEc:ags:rvaewp:24180
    DOI: 10.22004/ag.econ.24180
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    References listed on IDEAS

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    1. Bogetoft, Peter & Strange, Niels & Thorsen, Bo Jellesmark, 2001. "Efficiency and Merger Gains in The Danish Forestry Extension Service," Unit of Economics Working Papers 24210, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
    2. Peter Bogetoft & Jens Hougaard, 2003. "Rational Inefficiencies," Journal of Productivity Analysis, Springer, vol. 20(3), pages 243-271, November.
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    5. Peter Bogetoft & Dexiang Wang, 2005. "Estimating the Potential Gains from Mergers," Journal of Productivity Analysis, Springer, vol. 23(2), pages 145-171, May.
    6. Richard E. Howitt, 1995. "Positive Mathematical Programming," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 329-342.
    7. Runar Brännlund & Rolf Färe & Shawna Grosskopf, 1995. "Environmental regulation and profitability: An application to Swedish pulp and paper mills," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 6(1), pages 23-36, July.
    8. Niels Christian Petersen, 1990. "Data Envelopment Analysis on a Relaxed Set of Assumptions," Management Science, INFORMS, vol. 36(3), pages 305-314, March.
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    Cited by:

    1. Chen, Wei & Kauffman, Dan & Taylor, Daniel B. & Peterson, Everett B., 2008. "Managing Flounder Openings for Maximum Revenue," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6193, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Lozano, S. & Villa, G. & Brännlund, R., 2009. "Centralised reallocation of emission permits using DEA," European Journal of Operational Research, Elsevier, vol. 193(3), pages 752-760, March.
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    4. S Lozano & G Villa, 2010. "DEA-based pre-merger planning tool," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(10), pages 1485-1497, October.

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