Examining Bargaining Power in the Northeast Multispecies Days-at-Sea Market

Abstract

The Northeast U.S. groundfish fishery is economically large and culturally important. Between 2004 and 2009, the primary management control used in this fishery was a tradable input allowance system known as Days at Sea (DAS); however, many regulatory institutions limited trading. These barriers included a set of “conservation equivalency” restrictions based on length and horsepower that were explicitly designed to restrain increases in the fishing power of the fleet. Despite these limitations, trade in the DAS market was fairly robust; by 2008, over 40% of all used DAS were traded. This research uses ordinary least squares and quantile regression to examine the effects of these institutional limitations on the bargaining power of traders in this market. The conservation equivalency restrictions adversely impacted the bargaining power of both small sellers and large buyers of DAS. Despite these bargaining power effects, prices were responsive to changes in aggregate supply and productivity in economically reasonable ways. Finally, the downward intrayear trend in price is consistent with decay in the time value component of financial options.

Received June 21, 2011; accepted June 21, 2012

ACKNOWLEDGMENTS

The author acknowledges helpful comments from Amy Ando, John Braden, Dick Brazee, Eric Micheels, Eric Thunberg, two anonymous referees, and the editors. As always, responsibility for any remaining errors rests solely with the author. Any opinions, findings, conclusions or recommendations expressed in this article are his own and do not necessarily reflect the views of NOAA–Fisheries.