Strategic Behavior and the Environment > Vol 8 > Issue 2

The Northeast Atlantic Mackerel Crisis

Jens Leth Hougaard, University of Copenhagen, Department of Food and Resource Economics, Denmark, Frank Jensen, University of Copenhagen, Department of Food and Resource Economics, Denmark, , Aleksandrs Smilgins, Copenhagen Business School, Department of Economics, Denmark
Suggested Citation
Jens Leth Hougaard, Frank Jensen and Aleksandrs Smilgins (2020), "The Northeast Atlantic Mackerel Crisis", Strategic Behavior and the Environment: Vol. 8: No. 2, pp 169-218.

Publication Date: 25 Mar 2020
© 2020 J. L. Hougaard, F. Jensen and A. Smilgins
Econometric models,  Environmental Economics,  Economic theory,  Game theory,  Fisheries
JEL Codes: Q22C72C61
The mackerel crisisgame theoryinternally stable coalitions


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In this article:
A Theoretical Model 
Functional Forms and Parameter Values 


From 2010 and onwards, a crisis has occurred over the distribution of a yearly total allowable catch (TAC) for the mackerel fishery in the Northeast Atlantic Sea. The European Union (the EU), Norway (NO), Iceland (IC) and the Faroe Islands (the FI) are players in this "mackerel crisis". In the present study, we use game theory in an attempt to rationalize the actual behaviour of these players during the mackerel crisis. We identify the profit of each possible coalition structure (the coalitional values) by using a fisheries economic model, and quantify the coalitional values empirically by statistical estimation of the relevant functional relationships. Based on the statistical estimations, we define a benchmark scenario and conduct a number of sensitivity analyses. To try to rationalize the outcome during the mackerel crisis, we require that a relevant coalition must be internally stable in the sense that no structure has an incentive to split up. By using the notion of internal stability, we are partly able to rationalize the actual coalition formation during the mackerel crisis.