Operational tools and adaptive management

A3.4 New stakeholders and common agency
We keep to the application of linear incentive schemes and the assumption about symmetric
and complete information. Previously, Chortareas and Miller (2004) and Campoy and Negrete
(2008) have analysed the regulation of a central bank by two principals; the government and
an independent interest group. They use a linear incentive scheme, as the one derived by
Walsh (1995) and discusses how the introduction of a second interest group (industrialists)
affects the optimal incentive scheme of the government, and the net incentive scheme, i.e. the
aggregate of the incentive scheme offered by the two principals. As far as we know, a
common agency model has never been applied to fisheries regulations.
A3.4.1 Cooperating principals
Formally, the formulation and resolving of the model with cooperating principals coincides
with that of a single principal. The only difference being the principals‟ common objective
function. This function is now given by
U
C
(
C
C
C
( c , c )
)
0
C
2
1
F
( x)
C
1
pqx
c
(
0
F
)
C
2
C
3
C
1
E
M
j
F
1
Nqx
pqx
C
3
2
(
F
1
C
1
4a
(
C
2
2
2
F
1
2a
Nqx
F2
1
F
1
where θ is the costs to the two principals of formulating and implementing the common
C
MS
NGO
incentive scheme, and i ( i ) ( 1 ) i , i 1,
2,
3 . This implies that the weights of
the interests in the common objective function, λi C , are now weighted averages of the weights
in the objective functions of the two principals.
Applying the same procedure as in the single principal case, we find the optimal tax/subsidy
rate to be
C
2
C
2
F C
2 (
F
2
F
( ) )
c *
(22)
Setting α=0,5, and assuming that the NGO has higher environmental and lower economic and
social interests compared with the authorities, we get that
C MS
,
C
3
MS
3
)
C
3
c
)
2
C
1
(
(
F
)(
F
2
C
1
2a
Nqx
2
F
1
F
3
F
1
1 1 ,
)
C
2
2a
C
F
1
MS
2
c
C
C
(21)
. These characteristics contribute to make both nominator terms on the right hand
side of (22) lower, and the denominator lower compared to w* given in (17). Keeping the
assumption from above that the fishers hold lower environmental and higher economic and
social interests combined with the above inequalities, it can be shown that the optimal
tax/subsidy rate will increase as a consequence of an additional principal with strong
environmental interests, given that this principal cooperates with the original principal. This
means that the principal will set a higher tax or a lower subsidy on effort.
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