Effort subsidies and entry deterrence in transboundary fisheries

This paper analyzes a two-stage game, based on the Gordon–Schaefer model of the fishery, to examine the strategic entry-deterring role for effort subsidies in noncooperative transboundary fisheries. The game reveals that a country, whose domestic fleet has an effort cost advantage over a rival foreign fleet, may choose to subsidize domestic effort to the point that foreign entry in the fishery becomes unprofitable. Whether the outcome of the game is characterized by foreign entry deterrence or accommodation, and whether it is also characterized by a domestic effort subsidy or a tax, depends on domestic and foreign effort costs and the number of firms in each fleet. The various outcomes of the game analyzed here help to explain the persistence of subsidies in some world fisheries.