Fish quota auctions in the Russian Far East: a failed experiment

For three years (2001-2003), fish quotas in the Russian far east (REE) were allocated by auction. First, a short overview of the RFE fisheries is provided and how the total allowable catch (TAC) is allocated between regions and (before the auctions) enterprises. Then the auction system is discussed. The purpose of the auctions was to divert some of the resource rent to the state budget and to increase the transparency of the quota allocation mechanism. In the end, a lot less of the TAC than intended was sold by auctions. Nevertheless, the auctions provided a substantial income for the government. On the other hand they led to a decline in industry profits and greater indebtedness of the industry. Arguably they also led to more of illegal fishing, as firms bought quotas in order to cover operations on a greater scale that were not well monitored. In 2004 the auction system was abandoned, in part due to pressures from the industry.