The Economics of Territorial Use Rights Regulations: A Game Theoretic Approach

One type of regulation that has recently started to attract the attention of policymakers regarding artisanal fisheries is that of Territorial Use Rights (commonly known as TURFs in the literature). TURFs basically consist in the allocation of fishing rights to individuals and/or groups to fish in certain geographical locations. A requisite for these communities to be granted fishing rights is the formulation of a management and exploitation plan (MEP). While thus far the literature on TURFs has been centred on the biological and technical aspects of it, there is, to our knowledge, no work squarely dealing with the issue of enforcement of the MEP that the community, once granted the fishing use rights, have to comply with. We formally explore this issue from an economic perspective by formulating a game of social norm compliance in a regime of common property resource exploitation. The key characteristic of this game is a monitoring and sanctioning mechanism, where fishermen monitor and sanction one another. Within this game theoretic framework, we then specifically address the norm compliance and monitoring decisions. In particular we consider two cases, when the choices of fishing and monitoring efforts are independent decisions and when they are dependent. In addition, we also put forward a dynamic version of the norm compliance game based on the evolutionary game theoretic concept of replicator dynamics. Particularly, here we explore the long run stability of the noncompliant and compliant equilibria, analysing the population dynamics. JEL Classification: Q22, D62, K42, C72, C73,