AC 



Opportunity Cost + Variable Expenses 

 (Gross Income ) 



I X (Price) 



The price used was $0.80, the average annual price per 

 pound of Maine lobsters in 1970.'^ 



Figure 17 plots average social cost against the rank- 

 ing of fishermen on this basis. This ordinal ranking can 

 also be translated into a cardinal measure if, for exam- 

 ple, we wish to ascertain how many individuals from 

 the sample will leave the fishery if the effective price is 

 reduced by a given amount. 



To determine which of the groups comprise high and 

 low average social cost, we have derived the following 

 percentage breakdowns. Each percentage given re- 

 lates to a given group in a particular quartile. 



^ INDIVIDUALS IN SAMPLE RANKED 



FROM LOWEST TO HIGHEST 

 OPPORTUNITY COST 



Figure 17. — Ranking of individuals in sample of lobstermen accord- 

 ing to opportunity cost. 



Group 1 



Group 2 



Group 3 



Group 4 



In the lowest 25% average cost rankings (34 members) 

 there are: 



2/54= 

 3.7% 



6/16= 



37.5% 



12/29= 

 41.4% 



In the next lowest 25% (33 members): 



12/54= 

 22.2% 



3/16= 

 18.8% 



9/29= 

 31.0% 



In the next lowest 25% (33 members): 



14/54= 

 25.9% 



2/16= 



12.5% 



6/29= 



20.7% 



14/36= 

 38.9% 



9/36= 



25% 



11/36= 

 30.6% 



In the highest 25% (35 members): 



'^The equation used to compute AC could have been obtained 

 by merely dividing the numerator of the first term by quantity as- 

 suming price received by fishermen (in the sample) is approxi- 

 mately the same as the average annual ex-vessel price per pound of 

 lobster for Maine in 1970. A check of our sample revealed unsig- 

 nificant price deviation for individual fishermen from the annual 

 average, indicating that the market was fairly competitive and 

 uniform. 



26/54= 

 48.1% 



Total: 



100.0% 



5/16= 



31.25% 



100.0% 



2/29= 

 6.9% 



100.0% 



2/36= 



5.6% 



100.0% 



It is clear that a disproportionately higher number of 

 fishermen in group one and group two would leave the 

 fishery in response to a limited entry scheme such as a 

 license fee measure, auctioning device, etc. There- 

 fore, it may be concluded that any management em- 

 ploying a license fee would probably result in those 

 leaving the fishery that have the greatest mobility. 

 Unemployment would be minimal since the highly 

 mobile group would leave. However, the immobile 

 group would be forced to absorb the tax themselves, 

 thereby lowering their income. 



Let us look at an example of how we can determine 

 the socioeconomic impact of a management scheme 

 that involves a tax. Suppose a license fee on traps (see 

 management strategies discussed above) that reduced 

 the average returns to the fisherman by $0.32 per 

 pound. This would reduce the revenue per pound from 

 $0.80 to $0.48 per pound. Using our sample, 35 indi- 

 viduals would leave the lobster fishery because they 

 would not be able to make their opportunity cost (i.e., 

 they could make more in other industries). This group 

 would have the following characteristics: 



Who would be the last to leave the lobster fishery? 

 Those individuals (lowest 35 in sample) have the fol- 

 lowing characteristics: 



As anticipated, the socioeconomic consequences of 

 imposing a license fee on gear, other forms of license 

 fees, or auctioning the right to fish would be to cause 

 the individuals with the following characteristics to 

 leave the fishery: 



1. Younger lobstermen; 



2. More educated lobstermen; 



3. Lobstermen tending to spend more time 

 in the fishery. 



This group (i.e., first to leave) is pretty much as ex- 

 pected; however, it does indicate that lobstermen 

 spending more time in the fishery (than the hardcore 

 group — 106.1 days) would leave first. 



Therefore, we have concluded the following con- 

 cerning the socioeconomic impact of the various man- 

 agement schemes discussed above: 



(1) License fee levels that would actually displace 

 labor (i.e., reduction in fishing effort) would have a 



34 



