ANDERSON: OPTIMUM ECONOMIC YIELD 



feet the production possibilities in the other by 

 changing the catch per unit of effort. Therefore, 

 there is a direct technical relationship between 

 the two countries. An international open-access 

 equilibrium will exist when the average return to 

 effort is equal to the marginal cost of providing it. 

 (Whether or not such an equilibrium will ever be 

 reached is another question.) The international 

 optimum is where the marginal increase in the 

 value of the fish caught (regardless of the country 

 in which it is landed) is equal to the marginal cost 

 of producing the last unit of effort in both coun- 

 tries. Using this model, two interesting points can 

 be made. First, under open access, what are nor- 

 mally considered to be improvements in the terms 

 of trade, for either the exporter or the importer of 

 fish, can in some circumstances lead to a decrease 

 in welfare. Also attempts at unilateral manage- 

 ment can lead to decreases in welfare depending 

 on the way in which the other country's fishing 

 industry reacts. Proper regulation policies should 

 directly take these things into account. 



The topic of the third section was the necessary 

 conditions for an MEY of an international fishery. 

 The discussion with its implicit assumptions of 

 governments that are willing and able to 

 negotiate in an open and far ranging manner at 

 zero cost, free trade in all goods, regulation 

 methods that are not at the expense of efficiency, a 

 physically independent fish stock that is only 

 available to two countries, showed if negotiation is 

 possible that an international MEY can be 

 reached. This point will be the MEY of the fishery. 

 (Even if the assumption about the possibility of 

 free trade in final goods is dropped, the analysis of 

 trade concerning the distribution of property 

 rights to the fishery and trade in rights or effort is 

 still valid. Therefore, even if there are different 

 price and cost structures in the two countries, 

 there is a basis for selecting a second best total 

 amount and composition of fishing effort.) 



It is also pointed out that there are many points 

 that satisfy the conditions of an international 

 MEY and that the distribution of the rights to the 

 fishery (especially where the wealth from the 

 fishery is large relative to the productive 

 capacities of the countries) and, to a lesser extent, 

 the differences in negotiating ability have an ef- 

 fect on which one will apply at any point in time. 

 (There will not be one point that can be called 

 MEY as in the case of a national fishery.) This is 

 important because fishery negotiations typically 

 work in the reverse. They try to find some op- 



timum total amount of effort that should be ap- 

 plied and then they divide it in some equitable 

 fashion, but it is impossible to choose an optimum 

 amount unless the distribution has already been 

 determined. 



With regard to the argument that the underde- 

 veloped countries should be granted preferential 

 treatment in the distribution of the ocean's living 

 resources, the model points out that if this is ac- 

 cepted, it does not mean that they should necessar- 

 ily do the fishing. Rather, if they do not have a 

 comparative advantage in the production of 

 fishing effort, they would be better off by either 

 selling their rights to the fish or by hiring fishing 

 effort from other countries. 



In conclusion this paper has formalized the 

 analysis of the problems of international fisheries 

 management that earlier writers only briefly dis- 

 cussed. To their list of problems of different prices, 

 taste, and cost structures, it adds the eff"ect that 

 the distribution of the wealth of the fishery itself 

 can have on the final outcome. It presents the 

 three conditions for an MEY of an internationally 

 utilized fishery. More generally the conditions 

 guarantee the proper production bundle of all 

 goods and its optimal distribution given the pro- 

 ductive capacity of the countries and of the fishery 

 and the distribution of wealth. 



Although the discussion has been in terms of a 

 fishery, the analysis could be expanded to other 

 common property resources, such as air and 

 watersheds, deep-sea mineral sources, etc. by 

 taking proper consideration of the various physi- 

 cal characteristics of the resource involved. 



ACKNOWLEDGMENTS 



The author is appreciative of helpful comments 

 on an earlier draft of this paper from Gardner 

 Brown and an anonymous referee but retains 

 full responsibility for the contents. 



LITERATURE CITED 



Anderson, L. G. 



1973. Optimum economic yield of a fishery given a vari- 

 able price of output. J. Fish. Res. Board Can. 30:509-518. 

 Christy, F. T., Jr., and A. Scott. 



1965. The common wealth in ocean fisheries; some prob- 

 lems of growth and economic allocation. Johns Hopkins 

 Press, Baltimore, 281 p. 

 Copes, P. 



1970. The backward-bending supply curve of the fishing 

 industry. Scot. J. Polit. Econ. 17:69-77. 



65 



