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fishery sooner or later, and vessel owners will sell their quotas to others who can improve the utilization of their vessels. This is, indeed, part of the purpose of ITQs. However, even in a fishery that is not overcapitalized, some accumulation of quota will result if there are economies of scale in the industry, because larger and more efficient firms will be able to buy out smaller and less efficient firms.
Concentration of quota among a small number of quota-holding firms or individuals may unduly strengthen the market power of quota shareholders and adversely affect wages and working conditions of labor in the fishing industry. This could be a particular problem in rural coastal areas in which the alternatives for employment are limited. The ability of quota owners to dominate labor markets will depend on a number of factors, most importantly the supply of crew members and the general labor market. For example, the West Coast groundfish industry, in a region of positive economic growth and healthy economies, is currently experiencing a serious shortage in supply of experienced crew members, and accumulation of quota share would not be likely to have as great an effect on labor markets there as in other areas. The market power created by concentration can also marginalize smaller fishing firms, hurting their position vis-à-vis larger harvesting firms in competing for fish buyers in the markets.
One way of dealing with the problem of unreasonable power in the labor market is to set an upper limit on how large a share of the total quota pool can be held by any one firm or individual (concentration or accumulation limits). This method is applied in New Zealand, Icelandic, Canadian, and Alaskan IFQ fisheries; however, the limits vary from 0.5% in some Alaskan IFQs to 35% in some New Zealand IFQs. It is not possible to provide a general rule regarding an optimal percentage concentration; this will undoubtedly vary by fishery and the goals of fishery managers in the region. It seems necessary, however, that concentration limits of some degree be included in all new IFQ programs, because National Standard 4 of the Magnuson-Stevens Act prohibits the holding of excessive share (not defined by the act) by any individuals or entities and antitrust laws have not been effective in controlling concentration.
In regard to the conflict between concentration and efficiency, it is important to assess whether this conflict is serious and what trade-offs might exist. The usual antitrust arguments do not seem very relevant to management of IFQs. The fishing industry is not in a position to dominate its market to any appreciable extent. Fish from a particular IFQ-managed fishery compete with fish from other sources. In addition, fish markets are global and there are many possible substitutes for most fishery products from any given region; moreover, fish is but one particular food item and other food items compete substantially with and substitute for fish. Even if the IFQs of one particular fishery were owned by a single company, the company's influence on the market price of its fish is likely to be negligible. In contrast, such a firm might exert a strong influence in local factor markets (e.g., labor).