Myopic Stakelberg Equilibria and Social Coordination in a Share Contract Fishery

A general dynamic model of fishing under harvest share contracts is developed. Vessel owners hire fishermen to work on the vessels and pay them a share of the catch and an additional wage. The harvest rate depends on labor input, capital input, and stock level. Neither of the agents is unionized. On each vessel we have a principal agent settingwhere the crews' labor input decisions and vessel owners' decisions about harvest shares are based on myopic optimization.However, in this first analysis of the model risk is not included in the formulation. The paper concentrates on the incentive effects and in this framework the reason for a sharecontract to exist is the avoidance of transaction costs. In a share contractfishery both labor input and resource use are inefficient. A detailed analysis of the effectiveness of different regulationpolicies is presented.