Fishery Subsidies, Illegal Fuel Trading, and Conservation

Abstract

This article incorporates illegal fuel trading behavior to examine the effects of changes in the fishery subsidy rate, detection effort, and fish price on the level of fishing, illegal fuel trading, and fish biomass. The corresponding effects on the fisherman`s profits and the profits of the oil company that supplies the raw fuel to the fishery are also examined. The findings are, first, that the subsidy policy benefits the oil company, but its effects on the fisherman are ambiguous. Second, an increase in detection effort leads to less illegal activity in relation to fuel trading and more legal fishing resulting in less fish biomass. The detection policy hurts the oil company, the fisherman who engages in fuel trading, and resource conservation. Finally, an increase in fish price leads to a similar result as an increase in detection effort, but the effects on the fisherman`s profits are reversed. The oil company also benefits from increasing fish price.