Measuring the economic efficiency of a crew share remuneration system: a case study of the Basque purse seiner-live bait fleet

Abstract

Crew share remuneration systems are extensively used in fisheries as a way to tackle the moral hazard problem caused by asymmetric information distribution between the capital owner and the crew. To conduct a principal-agent analysis of such a system, it is important to know how it deals with fuel costs. This paper is based on economic efficiency indicator calculations and a number of simulations for the Basque purse seiner-live bait fleet to shed light on the crew-capital owner relationship in this principal-agent problem. We conclude that the share remuneration system can protect crewmembers from variations in fuel prices, which might be one of the factors explaining its popularity. However, some profit indicators are affected by the remuneration system and, thus, cannot be used for the comparisons of economic efficiency of the fleets.