Inefficiency Through Government Regulations: The Case of Norway's Fishery Policy

The fishery is a classic example of market failure. Government intervention does not necessarily correct this, but may instead seek economically inefficient solutions, because of either a deliberate trade-off between efficiency and equity or political expediency. Norway's fishery policy is seen as a case in point. Its stated objectives put a low priority on economic efficiency, while various objectives based on equity are put in the foreground. The result is that the contribution of Norway's fisheries to the national income is slight. Norway's fishery policy consists of two largely uncoordinated parts, one concerned with maintaining fishermen's incomes and the other with managing fish stocks. Since the introduction of the 200-mile limit, most fish stocks exploited by Norway have been managed by total allowable catches (TACs). While this has prevented the depletion of fish stocks, the regulations introduced to enforce the TACs have been an economic failure. The setting of TACs has in some cases revealed a willingness to attain solutions expedient in the short term at the expense of long-term benefits.