Prices versus Quantities in Fisheries Models: Comment

In a recent paper Jensen and Vestergaard (2003) compare price regulation (e.g landing fees) with quantity regulation (e.g. individually tradable quotas) under economic uncertainty in the spirit of Weitzman (1974). For a schooling fishery where marginal costs only depend on the harvest level they find that price regulation is preferred over quantity regulation when demand for fish is elastic. However, this finding is based on an assumption that does not hold and in fact quantity regulation is always preferred for this type of fishery irrespective of the demand elasticity. In this note we show that a pro quota result always applies for a schooling fishery and indicate where Jensen and Vestergaard (2003) go wrong in their original analysis.