Did tradable quota rights really affect fleet size? The case of the Gulf of Mexico reef-fish fishery*

An explicit policy objective of the tradable individual fishing quota programs introduced for various reef-fish species in the Gulf of Mexico in 2007 and 2010 was to restore cost-effectiveness by reducing the fishery's significant excess capacity. To gauge the success of this policy shift from a common-pool to a catch shares system, we construct a simple model of vessel participation that takes into account the regulatory systems as well as environmental and economic variables. Calibrating our model with historical data from 1990 to 2020, we show how changes in the total allowable catch, biomass, dockside prices, and the regulatory system can explain the observed contraction of the fleet size. We find that only about half of the initial contraction was due to the switch from a common-pool to a tradable quota system, the remainder being driven by the simultaneously occurring biomass recovery on the one hand and a participation-inflating contest for catch shares prior to the regime change on the other.