Reconsidering the Initial Allocation of ITQs: The Search for a Pareto-Safe Allocation between Fishing and Processing Sectors

Advancement of rights-based fishing is stymied by industry and congressional concern over distributional issues arising out of traditional ITQ design. This paper examines the existence and policy feasibility of two alternative initial allocations intended to leave the two principal industry participants, the fishers and processors, no worse off, while maximizing efficiency. Market structure is shown to be a critical consideration, not only to avoid unintended wealth redistribution, but also to achieve efficiency.