Quota market efficiency: The
New Zealand Annual Catch
Entitlement (ACE) market
James Stewart
Characteristics of Efficient Markets
• Information on price is easy to obtain
• Information on characteristics of the good is readily available
• Price establishes market equilibrium
• Transaction costs are low
• No barriers to entry and exit
• Identical goods
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>>DEPARTMENT OF ACCOUNTING & FINANCE
Efficient ACE Markets
• Facilitate catch balancing
• Reduce barriers to entry
• Reduce transaction costs
• Provide price signals and efficient resource allocation
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Number of Entities
Snapper, Number of Entities
350
600
700
603 620
306
300
250
243
513
600
256
237
198
200
150
500
100
200
50
100
0
392
380
363
295 288
300
131
268
1996
Quota owned
2000
2006
Quota held
400
307
300
340
337
260 249
223
200
100
0
0
1986
528
500
400
158
162
Tarakihi, Number of Entities
Hapuka-Bass, Number of Entities
1986
1996
Quota owned
2000
Quota held
2006
1986
1996
Quota owned
2000
2006
Quota held
Stewart, J., and Callager, P. (2011). Quota concentration in the New Zealand Fishery: Annual catch entitlement and the small fisher. Marine Policy. 35 : 631-646.
Quota “holding” in inshore fishery increased after ACE mechanism was introduced
in 2001
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>>DEPARTMENT OF ACCOUNTING & FINANCE
Quota and ACE Concentration
Hapuka-Bass
Concentration Ratio 20
Snapper
Concentration Ratio 20
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
0.908
0.921
0.835
0.802
0.827
0.680
0.552
0.530
1986
1996
Quota Owned
2000
2006
Quota Held
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
Tarakihi
Concentration Ratio 20
0.807
0.642
0.670
0.579
0.585
0.490
0.536
1986
0.597
1996
Quota Owned
2000
2006
Quota Held
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
0.901
0.779
0.817
0.670
0.781
0.648
1986
0.692
0.617
1996
Quota Owned
2000
2006
Quota Held
Stewart, J., and Callager, P. (2011). Quota concentration in the New Zealand Fishery: Annual catch entitlement and the small fisher. Marine Policy. 35 : 631-646.
•
NZ inshore fishery had become more concentrated
•
ACE market introduction (2001) has reduced concentration of ACE holding
(quota held)
•
Small fishers have entered fishery post 2001
>>UNITEC INSTITUTE OF TECHNOLOGY
>>DEPARTMENT OF ACCOUNTING & FINANCE
Survey Results - ACE Market Characteristics:
Nature of Involvement
TYPE OF INVOLVEMENT IN THE ACE MARKET (MAIN INVOLVEMENT)
80
70
68.6
60
Percent
50
40
30
19.8
20
10
5.8
4.7
Quota Holder
No Answer
1.2
0
Fisher
Processor
Broker
Fishers and processors dominate ACE market participation
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>>DEPARTMENT OF ACCOUNTING & FINANCE
ACE Market Participation: Duration and Behaviour
YEARS OF INVOLVEMENT IN THE ACE MARKET
90
ACE INVOLVEMENT
70
83.7
80
65.1
60
70
50
Percent
Percent
60
50
40
30
40
30
16.3
20
11.6
20
10
7.0
10
9.3
7.0
0
0
0-3 years
4-10 years
•
Majority are long-stayers
•
Majority of fishers buy ACE
>>UNITEC INSTITUTE OF TECHNOLOGY
> 10 years
I am mostly a buyer I am mostly a seller I buy and sell ACE
of ACE
of ACE
equally
No answer
>>DEPARTMENT OF ACCOUNTING & FINANCE
ACE Market Information Channels and
Frequency of Search
INFORMATION AVAILABILITY
27.9
30
40
24.4
25
33.7
35
30
20
17.4
15
11.6
12.8
10
5.8
Percent
Percent
INFORMATION SEARCH FREQUENCY
25
16.3
12.8
15
10
5
17.4
20
8.1
7.0
4.7
5
0
Fish Serve The Blue
Book
FishServe - Quota Broker Licensed Fish
FRED
Receiver
Fisher
contact
No answer
0
Daily
Weekly
•
Multiple search channels are available in ACE market
•
Search for ACE is a regular activity for participants
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Monthly
A few
times a
year
Yearly
Never
No answer
>>DEPARTMENT OF ACCOUNTING & FINANCE
Channels Used for Sourcing ACE
Disposal of Excess ACE
MAIN SOURCE OF AVAILABILITY
REASONS FOR NOT SELLING ACE IF UNDERFISHED BY MORE
THAN 10%
45
38.4
40
35
Percent
30
I could not find a
buyer, 29, 34%
26.7
25
18.6
20
16.3
15
Not worth the
trouble, 6, 7%
No Answer, 51,
59%
10
5
0
Quota Broker
Licensed Fish
Receiver
Fisher contacts
No answer
•
LFRs play key role in providing ACE to fishers
•
Some fish stocks have excess supply and zero price
>>UNITEC INSTITUTE OF TECHNOLOGY
>>DEPARTMENT OF ACCOUNTING & FINANCE
ACE Market Transaction Costs
ARE ACE MARKET TRANSACTIONS COSTLY TO PERFORM?
No Answer, 20,
23%
Yes, 17, 20%
NATURE OF ACE MARKET TRANSACTION COST
No Answer, 3,
18%
Time, 3, 17%
No, 49, 57%
Financial costs, 11,
65%
•
ACE market transaction costs are low
•
Financial costs are the main transaction cost (e.g., brokerage)
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