Input controls and overcapitalization: a general equilibrium analysis of the Spanish Mediterranean Sea fisheries

8 pages, 4 figures, 4 tablesGeneral equilibrium analysis shows that regulation based on caps on working hours per vessel affects the entry/exit margin (more low productivity vessels stay in the fishery), wages (a less productive fleet implies lower equilibrium wages) and aggregate employment allocated to the sector. Although the total number of vessels increases, in a general equilibrium setting, total employment in the fishery is reduced and the aggregate rents generated in the fishery are lower. Moreover, regulatory policies based on input controls also affect capital dynamics across the stock recovery phases. In comparison with a fishery regulated via efficient instruments, we find that those dynamics are characterized by fewer exits of vessels. Finally, using data from the Western Mediterranean Sea, we show that the use of input controls gives rise to a Spanish fleet around 14 percent larger than the one that would result from a non-distortionary instrumentJose Maria Da-Rocha gratefully acknowledges financial support from the Spanish Ministry of Economy and Competitiveness (ECO2016-78819-R) and Xunta de Galicia (ED431B 2019/34). Ral Prellezo gratefully acknowledges funding from the Department of Agriculture, Fisheries and Food of the Basque Country. Luis Taboada Antelo gratefully acknowledges the financial support of the Ramón y Cajal Programme of the Spanish Government. Jaume Sempere thanks financial support by CONACyT (research project No. A1-S-11222)Peer reviewe