Optimum fisheries utilization by individual firms : a study in property rights under a stock-flow production relationship

Abstract

For some time economists have studied the resource allocation problems that arise in marine fisheries because of nonexclusive property structures. The purpose of this dissertation is to extend this work by examining the decision processes of individual firms operating under different property structures. A brief survey of fish population dynamics is offered with a thorough review of the economic literature on fisheries following. This review of literature is divided into three sections: one on pioneering efforts in the field, one on externalities studies, and one on user cost models. Once this has been done, six possible structures of fishing rights are considered. In each case the firm is assumed to maximize the net present value of a multiperiod intertemporal earnings stream. The case of a freely accessible, nonscarce resource is used to introduce the analytical framework of the study. The other five cases examined assume a scarce resource. In the first of these a scarce, but freely accessible, fishery is considered. It is shown that the firm's optimization strategy involves arranging production so as to take advantage of times when fish are abundant. This is an important result because it indicates that successful attempts to reduce depletion will be met with pressures for offsetting increases in fishing activity. For the next two cases an elective system is assumed. It is concluded that circumstances can be hypothesized under which a majority will vote to exclude outsiders from the fishing ground, thereby reserving fishing rights for themselves. In a parallel fashion, it is also shown that a majority might vote to reduce depletion by restricting the fishing activity of all firms..