Restoring a Fish Stock: A Dynamic Bankruptcy Problem

Total Allowable Catch (TAC)-regu- lating schemes have been introduced in most fisheries. TAC distribution following the Propor- tional Rule, based on historical catches, implies that harvesters or vessel groups that have captured more in the past and contributed to overfishing are getting larger quotas than groups that have contributed less to overfishing. In contrast to this rule, a more egalitarian rule, the Constrained Equal Award Rule, is proposed for distributing the TAC. Contingent upon the fishing techniques used by the harvesters, it is demonstrated how the fish-stock recovery period, harvest, and profitability may vary according to these two rules. (JEL Q22, C70)