THE INTERACTION OF ECONOMIC, BIOLOGICAL, AND LEGAL 

 FORCES IN THE MIDDLE ATLANTIC OYSTER INDUSTRY 



Richard J. Agnello and Lawrence P. Donnelley' 



ABSTRACT 



Economic, environmental, and legal forces are contributing factors in the decline of the Middle Atlantic 

 oyster industry. This paper determines the interactions and importance of these forces by quantifying 

 and integrating some of the relevant variables into a supply and demand model of the oyster industry. 

 The statistical results yield significant and e.xpected parameter values with useful information on price 

 and income demand elasticities. Also implications of common property legal frameworks on resource 

 utilization are revealed. The main conclusions are that efforts to rehabilitate the industry by cleaning 

 up pollution, replacing cultch, and encouraging legal private property rights may have large social 

 values. 



The historically important Middle Atlantic oyster 

 industry is currently recognized as having many 

 of the symptoms of a declining industry. 

 Economic, biological, and legal forces are con- 

 tributing causal factors in the fishery's decline. 

 This paper attempts to integrate some of these 

 variables into an estimable supply and demand 

 model explaining oyster price and output 

 movements over time for the region. Economic 

 and biological variables are directly included in the 

 model while the legal dimension is focused on in- 

 directly by comparing empirical results for data 

 generated from different common property 

 structures. 



The multidimensional approach reveals infor- 

 mation on price and income elasticities, substitut- 

 ability relationships, and the effect a common 

 property regulatory framework has on resource 

 overutilization and depletion. The regional orien- 

 tation taken in this paper, rather than a national 

 or international focus, provides a departure from 

 much of the traditional fishery analysis and ena- 

 bles the effects of alternative property right 

 structures between states to be observed. - 



The impact property rights structure has on 

 economic efficiency and biological growth has been 

 discussed widely in the theoretical literature of 

 fishery modelling.' Less however has been written 



'Department of Economics, College of Business and Economics, 

 University of Delaware, Newark, DE 19711. 



^Recent empirical work confined primarily to economic factors 

 and directed towards species and regions different from our 

 analysis includes Bell (1968), Doll (1972), and Waugh and Norton 

 (1969). 



'Much has been written in fishery economics on the effects of 

 biological stock depletion due to common property legal struc- 



on empirical analyses of the effects property 

 rights have on economic and biological efficiency.^ 

 Consensus among the discussants is that common 

 property leads to overexploitation of fish stocks 

 and perhaps extinction of a species. Common 

 property right systems result in less efficient 

 resource allocation than private right systems 

 since the former do not ensure that the total costs 

 of an individual harvester's exploitation of the 

 resource are borne fully by him. Private property 

 internalizes the costs of the harvester's actions 

 thereby forcing the producer to bear not only all of 

 the costs of his actions but also to capture all of the 

 benefits. 



MIDDLE ATLANTIC OYSTER FISHERY 



The American Eastern oyster represents the 

 resource base of both the Gulf and Atlantic coasts 

 oyster industries. Following a brief mobile larval 

 stage, the oyster connects permanently to a firm 

 subaqueous material such as rock or shell deposits. 



tures. Some of the earlier treatments that are still widely 

 referred to can be found in Gordon (1954) and Scott (1955). For 

 more recent theoretical analyses see FuUcnbaum et al. (1972), 

 and Smith (1969). In the context of this literature, common 

 property means that any member of a community has the right 

 to harvest the fish stock. 



"Notable exceptions in the fishery literature where the effects 

 of legal ownership frameworks have been quantified include Bell 

 (1972) and O'Rourke (1971). For example Bell estimates the 

 redundant effort employed in the American lobster fishery which 

 is subject to common property. He concludes that approximately 

 50% of current fishing effort is required to achieve economic 

 efficiency. 



Also the authors, in an unpublished paper (Efficiency and 

 Property Rights in the U.S. Oyster Industry, 1974), estimate that 

 in 1969 oystermens' income would have increased by almost 50% 

 if all coastal states had relied on leasing of oyster beds. 



Manuscript accepted August 1974. 

 FISHERY BULLETIN: VOL. 73, NO. 2, 1975. 



256 



