How Are ITQ Prices Discovered?

In the creation of new environmental markets, prices for newly created assets must be discovered by market participants. We study price formation in newly created catch share markets, focusing on how relative prices received by small and large quota holders evolve as markets mature. Using transaction-level data from New Zealand individual transferable quota fisheries, we document substantial and persistent price discounts for smaller sellers in permanent quota sales. In contrast, price differences in lease markets are smaller and less systematic over time. Event-time analyses show that seller-size-related price gaps remain pronounced in sales markets well beyond program inception, while lease markets exhibit weaker and less stable patterns. These findings highlight the role of contract structure in shaping price dispersion in decentralized resource markets.