International management of North Sea herring

Abstract

North Sea herring is a transboundary resource, shared by the EU and Norway. The purpose of this paper is to investigate how the harvests or total allowable catch quotas (TACs) for this species should be divided between these two countries so that both parties are satisfied. We apply a discrete-time game-theoretic model in which we show that the EU should be allocated more than half of the TAC even if the EU has higher harvesting costs. This result is due to the distribution pattern of the herring, with a larger share of herring located in the EU zone. However, we find that according to the Nash bargaining solution, the current sharing allocates too large a share to the EU.