Cost sharing and catch sharing

The model developed in this paper attempts to provide an explanation of the fact that Icelandic vessel owners and Icelandic skippers do not share costs of operation of a vessel. In the model, a skipper is contracted to take a fishing vessel to the fishing ground. The skipper is remunerated with a sh...

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Bibliographic Details
Published in:Journal of development economics 1999-02, Vol.58 (1), p.25-44
Main Author: Matthiasson, Thorolfur
Format: Article
Language:English
Subjects:
Compensation
Cost analysis
Cost sharing
Costs
Development economics
Economic models
Economic theory
Fishing
Fishing industry
Fishing vessels
Iceland
Modelling
Remuneration systems
Risk
Studies
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Summary:The model developed in this paper attempts to provide an explanation of the fact that Icelandic vessel owners and Icelandic skippers do not share costs of operation of a vessel. In the model, a skipper is contracted to take a fishing vessel to the fishing ground. The skipper is remunerated with a share of the catch, subject to an agreed minimum. Skippers and vessel owners are modelled as if risk-neutral. Skippers develop a fishing strategy which is more costly, the higher the value of the potential catch associated with that strategy. Costs that accrue are partly pecuniary (and shareable) and partly skipper-specific (and non-shareable). The conclusions of the paper demonstrate that given the assumptions of our model, a vessel owner should prefer a remuneration contract with a positive revenue share and zero cost share.
ISSN:0304-3878
1872-6089
DOI:10.1016/S0304-3878(98)00101-1