John R. Boyce

Instrument choice in a fishery

Abstract This paper considers the choice of regulatory instruments in a fishery. Fishing captains, consumers, and input suppliers each attempt to influence the regulators choice of instruments. The regulator chooses among instruments such as input restrictions, entry restrictions, or individual transferable quotas (ITQs). Regulatory instruments that result in zero fishery rents can only occur if the regulator places an extraordinary weight on the welfare of input suppliers relative to fishing captains and consumers. Indeed, heterogeneity of fishing captains is neither necessary nor sufficient to obtain regulations that fail to generate fishery rents.

The Alaska Salmon Enhancement Program: A Cost/Benefit Analysis

In May 1991, the Alaska Senates Special Committee on Domestic and International Commercial Fisheries initiated the first review of the states salmon enhancement program since its inception 20 years ago. As part of this review, a cost/benefit analysis of the States enhancement program for salmon was performed with cooperation from the Fisheries Research Enhancement Division of the Alaska Department of Fish and Game. The main results are that the additional producers surplus generated by the pink and sockeye hatchery programs are estimated to be less than the costs of running these programs. Eliminating the entire pink or sockeye salmon programs is estimated to increase net benefits by about 8% and 6%, respectively. A 15% increase in either program is estimated to result in a reduction in net benefits and a 15% decrease in either program is estimated to result in a slight increase in net benefits. Estimates of the confidence intervals for net benefits suggest that the gains from the elimination of either the pink program or the sockeye program are statistically different from zero. However, changes of plus or minus 15% of current hatchery production are found not to statistically affect net benefits.

Emissions Taxation in Durable Goods Oligopoly

This paper examines the use of taxation to control external damage due to pollution when product durability is endogenously determined. A special form of the emissions function is also examined which is equivalent to an excise tax on output. The dynamic oligopoly model indicates that many conventional results in the durability and taxation literature need not hold when durability is endogenously determined. In particular, the analysis shows durability may not be independent of industry structure nor will firms minimize their manufacturing costs of providing service. In addition, the second-best tax on imperfectly competitive firms is not necessarily less than the tax on a competitive firm when firms choose their product_s durability.

Taxation and market power when products are durable

Empirical studies suggest that industries hardest hit by government regulations, such as pollution regulations, are both highly concentrated and manufacture durable products. We analyze a two-period durable goods monopoly model where the firm faces government restrictions in the form of pollution or excise taxes. In contrast to non-durable monopolistic industries, we show that taxes on pollution or an excise tax on output may increase a durable goods monopolists commitment ability and market power. Indeed, any policy which restricts future output may have the perverse effect of increasing a monopolists bargaining power with buyers and enhance their profits.

Rent-seeking in natural resource quota allocations

This paper examines the incentives for rent-seeking in the allocation of natural resource quotas to competing user groups by political bodies. The political body has discretion in making the allocation, and competing user groups rent-seek to influence the allocation. We investigate ways in which the governmental body can affect the behavior of the players by setting the ground rules for the competition. A political body can affect an allocatively (Pareto) efficient outcome by choosing an appropriate default (pre rent-seeking) policy. Surprisingly, an allocatively efficient default policy is unlikely to minimize social costs. However, winner-take-all default policies are likely to maximize, not minimize, rent-seeking. A competitive post-allocation market reduces rent-seeking, but is not, either itself or in combination with an efficient default policy, capable of minimizing social costs. However, forcing winners in political redistributions to fully compensate losers both lowers the rent-seeking levels relative to a potential compensation criterion and, when used together with an efficient default policy, is capable of obtaining the first-best solution of an allocatively efficient allocation with zero rent-seeking.

R&D and product obsolescence

Claims of “planned obsolescence” have often been made by various consumer groups. Bulow (1986) examined a monopolists choice of product durability and found that firms who sell their products tend to choose lower durability levels than firms that rent. We argue that the speed of new product development may be a more appropriate proxy for obsolescence than is durability. Reformulating Bulows model in terms of R&D choice rather than durability choice, we find that sales firms engage in higher levels of R&D than do rental firms. Additionally, we provide an empirical example using data from the copier and computer industries which also suggests a strong positive relationship between the R&D intensity of a firm and the proportion of output sold versus rented.

Using Participation Data to Estimate Fishing Costs for Commercial Salmon Fisheries in Alaska

This paper estimates the fishing costs and the returns to fishing for nine commercial salmon fleets in Alaska. The econometric model uses a twostage least squares estimation procedure to estimate the effect of congestion and heterogeneity on the returns to fishermen. The hypotheses that fishermen are homogenous and that there is no congestion externality present in the fisheries are strongly rejected. The data indicates that fishermen are quite heterogeneous in fishing skill levels. This difference accounts for the overall estimates of positive net returns to the common property fisheries. Estimates of the net returns to the fisheries suggest that the returns to different gear types vary largely. The set net fleets are found to have the highest return as a percentage of total revenues.

Learning by Doing, Knowledge Spillovers, and Technological and Organizational Change in High-Altitude Mountaineering

We present an analysis of microlevel data from mountaineering on the 14 peaks over 8,000 m in height during the period 1895-1998. Prior to 1950, no expedition was successful in making an ascent and almost half of expeditions experienced a death, frostbite, or altitude sickness. By the 1990s, however, over half of the expeditions would successfully make an ascent and only about one in seven would experience an adverse outcome. Our objective is to distinguish between the effects of learning by doing and knowledge spillovers versus the effects of changes in technology or economic organization in explaining these results. As we can identify each climber by name and nationality, as well as each expedition teams methods and outcomes, we are able to disentangle the effects of learning at the individual, national, and international levels from effects due to improvements in climbing technology or changes in organizational methods and objectives. We find evidence that both individual learning by doing and learning through knowledge spillovers have contributed to the observed increase in ascent rates and to the decrease in death, frostbite, and altitude sickness rates.

Prediction and Inference in the Hubbert-Deffeyes Peak Oil Model

World oil production has grown at an annual rate of 4.86% since 1900. Yet, the Hubbert-Deffeyes ‘peak oil’ (HDPO) model predicts that world oil production is about to enter a sustained period of decline. This paper investigates the empirical robustness of these claims. I document that the data for the HDPO model shows that the ratio of production-to-cumulative-production is decreasing in cumulative production, and that the rate of decrease is itself decreasing. The HDPO model attempts to fit a linear curve through this data. To do so, Hubbert and Deffeyes are forced to either exclude early data or to discount the validity of discoveries and reserves data. I show that an HDPO model which includes early data systematically under-predicts actual cumulative production and that the data also rejects the hypothesis that the fit is linear. These findings undermine claims that the HDPO model is capable of yielding meaningful measures of ultimately recoverable reserves.

Preliminary Injunctions and Damage Rules in Patent Law

This paper shows that preliminary injunctions may be sought in patent cases to obtain market power during the period of the injunction and are likely to be sought only where there is a small probability that the patent will be ultimately found valid. Both patentee and alleged infringer benefit from a preliminary injunction. This is an artifact of the asymmetry of current damage rules. Altering the rules so that an innovator who wins a preliminary injunction on a patent ultimately declared invalid pays both lost profits to the imitator and a fine equal to lost consumer surplus creates efficient incentives.