This article presents an economic model of the efficiency and industry impacts of individual vs. collective approaches to rights-based management in fisheries. Key features of the model are the inclusion of uncertainty and an optimally designed mechanism for paying penalties or buying additional quota when harvests exceed allowances. Contrary to what might be expected, we find that a risk pooling mechanism (through either collective quotas or ITQs) does not necessarily reduce the probability of quota overages. We also show that for arbitrary penalties, the incentive effects faced by harvesters differ under the various approaches. The ability of regulators to optimally adjust the enforcement mechanism (here the quota price) plays a critical role in determining the efficiency of the different approaches. Finally, the optimal quota prices and the conditions that trigger them differ across the approaches; hence the impacts on expected profits differ as well.

JEL Codes: D62, D70, Q22, Q28.