$/lb. 



Part B: Demand and 

 Competitive Decentral- 

 lized Supply of Fish 



x„ = MSY 



(lbs. per Unit Time) 



Fi^re 1. — Industry demand together with competitive supply offish. 



leave population (biomass) constant over 

 time" (Crutchfield and Zellner, 1962). 



Since the individual competitive fisherman 

 has no control over the size of the fleet or the 

 stock of fish, these factors do not enter the 

 decision making process of the individual fisher- 

 man, although they do enter the cost function. 

 Thus there are technological externalities 

 associated with a fishery — a "congestion" 

 cost, reflecting the decreasing catch per unit 

 effort from a given stock of fish as more vessels 

 enter the fishery, and a "growth" cost, reflecting 

 the decreased catch per unit effort by a given 

 number of units of effort from a reduced biomass 

 of fish, and represented by the upward shifting 

 of the S curves as the stock of fish is reduced. 



The curve XX is thus a long nan average 

 cost curve. A regulatory agency which has as 

 its purpose the maximization of the net eco- 

 nomic benefits of a fishery will have to take 

 account of the technological externalities in- 

 herent in a common property resource, such 

 as a fishery. 



Figure 2 adds Long Run Marginal Cost 

 (including congestion and gi'owth costs) to the 

 Crutchfield-Zellner model. The LRMC curve 

 is the sum of the marginal congestion and 

 marginal growth cost curves, and is asymptotic 

 to MSY since, as sustainable yield harvest 

 increases, equilibrium fish biomass decreases 

 (from its maximum level W^ax ) until eventu- 

 ally a further increase in effort results in a 



66 



