Quantitative Seminar: Aneesh Hariharan (QERM student)

Aneesh Hariharan (PhD Student, QERM) will be presenting at the UW School of Aquatic and Fishery Sciences (SAFS) Quantitative Seminar on April 3,2020.

[Note: The Quantitative Seminar series will be hosted online via Zoom this spring. To attend, please click on this link https://washington.zoom.us/j/181236406 and open the Zoom app.]

Aneesh Hariharan (PhD Student, QERM)

Title: An ownership-based game theoretic model for a two-nation fishery in the presence of asymmetric bargaining

Abstract:

Rents generated from harvesting fisheries resources in the Western and Central Pacific Ocean is vital to the long-term socio-economic well-being of certain groups of countries, such as the Pacific Island Countries (PIC’s). However, distant water fishing nations (DWFN’s) contribute to the majority of catch in PIC waters. While the DWFN’s pay an access fee, PIC’s feel underpaid. It was recommended that PIC’s domesticate their fisheries (specifically tuna) and engage in training programs to build their human capital.  While PIC’s own the harvest rights, they do not necessarily possess the human or physical capital needed to fully domesticate the tuna industry. Further, the asymmetry in bargaining power over the expected gross revenues of DWFN’s still remains, even with advances in domestication. In this talk, an ownership based game theoretic model for 2 nations is presented to answer the question: What is the bargaining power of the PIC’s (Nation 1) when both the DWFN’s (Nation 2) and the PIC’s make investments in their human capital?  In this model, the owner is assumed to have full rights over the EEZ for sustainable harvests of fish. The model is applied to three periods; in the first period, an ownership structure is contemplated by the PIC’s and DWFN’s. In the second period, both countries make non-contractible investments in their human capital and in the third period, a bargaining game ensues over who owns the fish in the EEZ. Results show that (i) joint ownership is not strictly optimal (ii) for equal bargaining powers, the country whose investment is more productive should be the owner and (iii) for any advantages in catchabilities, DWFN ownership is optimal if its bargaining power is sufficiently small and PIC ownership is optimal if the DWFN’s bargaining power is sufficiently large.