Does Rationalization Improve Economy-Wide Welfare? A General Equilibrium Analysis of a Regional Fishery in a Developed Country

This study uses a bioeconomic regional computable general equilibrium (CGE) model to assess the economic and welfare effects on a sub-national region of transitioning from regulated open access to rationalization for a mackerel fishery in a region (Busan), Korea. Results from the baseline simulation demonstrate that the resource rent from the fishery increases, but that the aggregate and per capita welfares in the region can deteriorate due to an out-migration of the factors of production. However, sensitivity analyses reveal that the sign and size of the aggregate and per capita welfare changes depend on, among other things, (i) regional factor mobility, (ii) the ratio of the initial level of biomass to the carrying capacity, and (iii) the magnitude of the rationalization-induced enhancement in the fishing efficiency.