whose mandates the resource managers must 

 have in order to perform their duties viably. It 

 is useful to lump these other objectives into 

 two categories — equity in the distribution of 

 income, and noneconomic objectives. Equity of 

 income distribution is relevant both in con- 

 straining changes from the status quo and in 

 defining acceptable distributions of income. This 

 latter can be illustrated by the popularity 

 among some authors of giving some supra- 

 national agency control over all marine resources 

 and by current claims of U.S. nationals to the 

 natural right of the citizens of a country over 

 fish which swim over "their" continental shelf. 

 Noneconomic objectives are important in the 

 arguments of some concerning the inherent evil 

 of blocking entry to a fishing ground. Of course, 

 several objectives can be classified more than 

 one way. The repercussions of sudden, unexpected 

 unemployment of fishermen can be called adjust- 

 ment costs or could be appropriately titled 

 sociological phenomena. 



In any case, it is not appropriate for econo- 

 mists to identify conclusions of their positive 

 models with normative policy proposals. Society 

 is not composed of economic men (Boulding, 

 1969). Rather the economist must first try to 

 maximize economic gain subject to noneconomic 

 constraints. However, when noneconomic ob- 

 jectives are not postulated at unique target 

 levels, the tradeoffs between economic and non- 

 economic objectives must be considered. I will 

 return to this practical problem after consider- 

 ing some problems of analyzing economic 

 objectives. 



SECOND-BEST FISHERIES, OR 

 WHEN IS AN OPTIMUM NOT OPTIMAL? 



The application of the theory of common 

 property resources to ocean fisheries leads 

 inexorably to two conclusions. First, it is 

 possible to observe an allocation of human and 

 capital resources in fishing with social marginal 

 products which are negative. Second, the optimal 

 allocation of resources is one in which social 

 marginal revenue product equals social oppor- 

 tunity cost of factors used to catch fish. This 

 is to say that less fishing effort should be 

 employed than would be required to harvest 

 the maximum sustainable yield unless the 



alternative use of the marginal resources is 

 valueless. 



Crutchfield and Pontecorvo (1969, p. 35) have 

 pointed out that the need for intervention in 

 fishery management hinges upon the assump- 

 tion of competitive behavior by the downstream 

 purchasers of the resource. 



A monopsonist would impose a rational solution 

 on the fishery, i.e., he would capture the rent by 

 offering sellers a price that would permit only the 

 most efficient exploitation of the resource to take 

 place, and the malallocation of resources, which 

 results from the combination of free enti-y and 

 common property, would be avoided. If, in turn, the 

 product market in which he sells is highly competi- 

 tive, monopsony could provide a near-optimal level 

 of output and real costs. 



While Crutchfield and Pontecorvo go on to 

 point out that the industry which purchases 

 fish from fishermen is a competitive oligopsony 

 and does 7wt lead to a socially optimal solution, 

 their argument still holds qualitatively. When 

 an -oligopsonistic industry faces a group of 

 competitive sellers the price paid for the output 

 of the competitive sellers is less than the social 

 valuation for an incremental unit, i.e., the social 

 marginal revenue product exceeds the market 

 price. This divergence alters the optimal inter- 

 vention in the market structure of fish buyers 

 and alters the optimal fisheiy management 

 scheme, assuming control over the two cannot 

 be coordinated. 



If the market between fishermen and fish 

 processors is not perfectly competitive, the 

 correction of fisheries resource allocation ignor- 

 ing this fact could actually misallocate resources. 

 Equating the social marginal product of fishing 

 effort multiplied by observed market price to 

 social opportunity cost of factors used to catch 

 fish would secure a level of fishing effort less 

 than the one where the true value of social 

 marginal product equals social opportunity cost 

 of factors. If the demand for fish is elastic 

 throughout the relevant range, the correct 

 solution would -still occur prior to attainment 

 of maximum .sustainable physical yield. The 

 simple maximum sustainable physical yield 

 criterion is .still in error and the error is still in 

 the same direction, but the error is smaller than 

 the simpler analysis. Thus the efficiency loss 

 from using the physical rule is smaller than 

 previous analysis has suggested. 



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