FISHERY BULLETIN: VOL. 73, NO. 1 



try X producing Ex\ units of effort and country Y 

 producing Eyi units. (To be completely general 

 this combination of effort can also be thought of as 

 the one that both countries agree to use as an 

 initial bargaining point.) Assume that under 

 these conditions country X is operating at point A 

 in Figure 4a. At that point, which is on social 

 indifference curve/j , there is a specified amount of 

 Ey (which determines the shape and position of 

 X's PP curve) and Ex (which determines the posi- 

 tion on the curve) being produced. There are other 

 combinations of Ex and Ey that will cause X to 

 operate on/j however. For example, liEy remains 

 the same and Ex is reduced (i.e. resources are 

 shifted from the production of effort to manufac- 

 turing) such that there is a movement to point B, 

 the level of social welfare will not change.'' Smal- 

 ler reductions o^Ex that are matched by increases 

 vn.Ey will leave welfare unchanged if the increase 

 in Ey shifts the PP curve down such that the 

 country is still operating on /j. Similarly, in- 

 creases in Ex , or reductions by more than is neces- 

 sary to shift the country to point B, will result in 

 constant welfare if there is a simultaneous reduc- 

 tion in Ey large enough to shift the PP curve up by 

 the appropriate amount. 



This information can be more meaningfully dis- 

 played in terms of the property right indifference 

 curves (PRI curves) in Figure 4b. The axis repre- 

 sent allowable levels of Ex and Ey. These allow- 

 able levels are essentially property rights to the 

 annual harvest that the specified amount ofE will 

 catch. They are labeled PRx and PRy, but when 

 there is no trade in effort, then Ex equals PRx and 

 Ey equals PRy. Point A' represents the interna- 

 tional open-access equilibrium point. That is, Eyi 

 is the level of effort in country Y that will cause 

 country X to be operating on the PP curve in 

 Figure 4a, and Exi is the amount of effort in coun- 

 try X that will cause it to operate at point A on 

 that curve. Every other point in the diagram rep- 

 resents a different combination of effort in each 

 country and, in effect, represents a distribution of 

 the fishery. Point A' is the distribution of the 

 property rights by the rule of capture. Movements 

 to the left represent reductions in the amount of 

 allowable effort for country X, and downward 



'Throughout it is assumed that there is free mobility of re- 

 sources between fishing and manufacturing. As has been cor- 

 rectly pointed out in the past, this is not always the case. Rather 

 there is a time lag of perhaps as much as a generation involved. 

 This fact should be considered when making practical applica- 

 tions of the model. 



(Eyi) 



M, 



X(E.) 



Figure 4. — The property right indifference (PRI) curves for each 

 country follow directly from the relationship between their pro- 

 duction possibility curves and indifference curves. 



movements represent a reduction for country Y. 



PRIxi is that collection of bundles ofP/?Y andPRy 

 where country X is operating on social indiffer- 

 ence curve 1 1 . Increases in PRx (movements to the 

 right) will only result in a constant welfare if it is 

 matched by reductions in PRy. Small reductions 

 in PRx with PRy remaining unchanged, will nor- 

 mally increase welfare, and so for welfare to re- 

 main constant, PRy must increase. As reductions 

 in PRx get larger, however, welfare will remain 

 constant only if there are reductions in both PRx 

 and PRy. Similarly, PRIx2 and PRIx3 are combi- 

 nations ofPRx and PRy where the level of welfare 

 is the same as along 1 2 and /g, respectively.^ It 



1 



^The curves will be concave from below. For reductions in 

 allowable levels of effort, the greater the reduction, the greater is 

 the increase in Fx that is necessary to keep welfare constant, 

 and at the same time, the effect of decreases in the allowable 



60 



