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Abstract

This paper examines the impact of dolphin-safe eco-labeling and how it fundamentally altered the spatial distribution of fishing effort and fishermen's willingness to pay to avoid dolphins. To do this, a dynamic discrete choice econometric model is applied to the Eastern Tropical Pacific tuna fishery. This econometric approach combines a dynamic programming component with the static discrete site choice model. This estimator couples the current period projected profits associated with fishing a specific site with the value of all future location choices on the cruise, assuming choices are made optimally. The key feature of this model is that it recovers behavioral parameters and solves the dynamic programming problem recursively. The dynamic site choice model reveals a markedly higher impact on producers as compared to the commonly used static model following the labeling regime. Further, in all but a few cases the common practice in dynamic choice models of setting discount factors equal to one is rejected.

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