The Value of Information in a Congested Fishery

Abstract We model a fishery with potential congestion, in which firms obtain public and private signals about the location of the densest fish stock. We analytically determine the regions of parameter space where greater precision of public and/or private information increases welfare, and we examine the effects of two types of information sharing. Using high-resolution data from the world’s largest fishery, we estimate the structural model. Point estimates imply that more precise private information raises welfare, whereas more precise public information has a negligible effect on welfare. Moreover, welfare is much more sensitive to changes in the precision of private information than to changes in the precision of public information. This difference reflects the fact that public information increases congestion more than private information does. We also find empirically that a small amount of information sharing can reduce welfare, whereas more extensive information sharing raises welfare, as do information clubs.