Comparison of simultaneous and combinatorial auction designs in fisheries quota market

Individual transferable quota (ITQ) markets are being used successfully to distribute quotas in single region and single species fisheries. In many parts of the world, the development of well crafted markets for multispecies or multiregional fisheries is still evolving. As a result, there exists an opportunity to inform policy by providing research insights into the relative merits of alternative market designs for such fisheries.

This study explored the relative merits of a simultaneous ascending auction design and an iterative combinatorial auction design for a hypothetical multiple region quota market. In a simultaneous auction, separate auctions are run in parallel for individual species or regions. During intermediate rounds, fishers can adjust their bids in auction depending on their position in the other auction. In a combinatorial auction, a fisher can purchase a combination of quotas (or a package quota) for different fish species or regions in the same auction. Being able to acquire bundles of species or regions allows fishers to take advantage of complementarities. To date, the potentials of such auctions have not been thoroughly tested in fisheries quota markets. This study found that while a simultaneous auction design was more efficient than combinatorial auction design overall, combinatorial market design took fewer rounds to make final allocations and performed better in high synergy environments.