A Game-Theoretical Consideration on the Difference in the Fisheries Negotiation Procedures

The coastal countries in the Western and Central Pacific area negotiate over the fishing rights and the access fees with the Distant Water Fishing Nations (DWFNs) such as Japan and the United States. Almost all fisheries negotiations in this area take a bilateral approach in which each pair of a coastal country and a DWFN negotiates; if they reach an agreement, a bilateral treaty is established. The only exception is a multilateral approach taken in the negotiation between the US and the regional coalition of the coastal countries.

In this paper, we construct a game-theoretical model of the fisheries negotiations comprised of three countries (one DWFN and two coastal countries) and examine how the difference in the negotiation approaches affects the catches of fish, the access fees, and the welfare of the countries concerned. We find that (i) the DWFN obtains the same payoffs under both the  bilateral and multilateral approaches; (ii) a coastal country with relatively abundant fishery resources can obtain a higher payoff under the bilateral approach than under the multilateral one, and the opposite is true for a coastal country with relatively scarce fishery resources (i.e., the ``fish-rich'' country prefers the bilateral approach to the multilateral one); however, (iii) the total payoffs to the coastal countries as a whole under both approaches are the same.

Further, we introduce an alternative, theoretically simple, multilateral approach, which treats all the countries symmetrically. By comparing it with the above two approaches, we demonstrate that in the alternative multilateral approach (iv) the DWFN obtains a lower payoff but the coastal countries as a whole obtain a higher total payoff; (v) if the fishery resource endowments of the coastal countries are sufficiently close to each other, both coastal countries can obtain higher payoffs; however, (vi) if a coastal country has the fishery resource endowment sufficiently greater than the other coastal country, the former country obtains a lower payoff than under the bilateral approach (i.e., the ``fish-rich'' country may prefer the bilateral approach to the alternative multilateral approach).