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ITQs, Firm Dynamics and Wealth Distribution: Does full tradability increase inequality?

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  • Da Rocha Alvarez, Jose Maria
  • Sempere, Jaume

Abstract

Concerns over the distributive effects of ITQ’s lead to restrictions on their tradability. We consider a general equilibrium model with firm dynamics. In contrast with the standard framework, the distribution of firms is not exogenous, but is instead determined endogenously by entry/exit decisions made by firms. We show that the stationary wealth distribution depends on whether the ITQs are fully tradable or not. We calibrate our model to match the observed increase in revenue inequality in the Northeast Multispecies (ground-fish) U.S. Fishery. We show that although observed revenue inequality increases, wealth inequality is reduced by 40%.

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  • Da Rocha Alvarez, Jose Maria & Sempere, Jaume, 2015. "ITQs, Firm Dynamics and Wealth Distribution: Does full tradability increase inequality?," MPRA Paper 66083, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66083
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    Cited by:

    1. Da Rocha Alvarez, Jose Maria & Prellezo, Raul & Sempere, Jaume & Taboada-Antelo, Luis, 2016. "Fleet dynamics and capital malleability," MPRA Paper 75370, University Library of Munich, Germany.
    2. Da Rocha Alvarez, Jose Maria & Prellezo, Raul & Sempere, Jaume & Taboada-Antelo, Luis, 2016. "Fleet dynamics and overcapitalization under rational expectations," MPRA Paper 79578, University Library of Munich, Germany.
    3. José-María Da-Rocha & Raul Prellezo & Jaume Sempere & Luis Taboada Antelo, 2017. "A dynamic economic equilibrium model for the economic assessment of the fishery stock-rebuilding policies," Serie documentos de trabajo del Centro de Estudios Económicos 2017-01, El Colegio de México, Centro de Estudios Económicos.
    4. Ráfales, Jonatan & Vázquez, Carlos, 2024. "Jump–diffusion productivity models in equilibrium problems with heterogeneous agents," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 225(C), pages 313-331.
    5. María-José Gutiérrez & Belén Inguanzo, 2019. "Contributing to Fisheries Sustainability: Inequality Analysis in the High Seas Catches of Countries," Sustainability, MDPI, vol. 11(11), pages 1-20, June.
    6. Speir, Cameron & Lee, Min-Yang, 2021. "Geographic Distribution of Commercial Fishing Landings and Port Consolidation Following ITQ Implementation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 46(1), January.

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    More about this item

    Keywords

    ITQ; wealth distribution; firm dynamics; inequality; permit markets;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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