Equilibrium catchRecall the stock net growth expression | The decision makersOpen access has to be studied as a situation of having many independent decision makers fishing on the same stock resource. We have been assuming a homogeneous fleet with respect of technical and economic efficiency. Now let each fishing effort unit represent each decision maker. Since all decision makers are facing the same stock situation at the same time, the revenue of each decision maker will be the average revenueAR(E) = TR(E)/E The cost of each decision maker is in general given by the marginal cost MC(E) = dTC/dE which in the case of a linear cost equation is MC = a The decision maker (e.g. fisher) is indifferent between fishing of moving the input factors in production (labour and capital) to the best alternative placement when AR = MC as this situation provides the fisher with a normal profit from the fishing activity. If AR > MC one should expect more fishers to enter the fishery, as they will earn a profit exceeding the normal level in the fishery. By the same kind of reasoning AR < MC will lead to decision makers leaving the fishery, as a higher profit could be earned by placing the input factors elsewhere. The reasoning above shows that AR = MC really represents the open access equilibrium where a large number of independent decision makers freely chose to enter or exit the fishery. This equilibrium is also referred to as the bioeconomic equilibrium, the combined biological equilibrium ( The relation between revenue (blue) and cost (red) is shown in the figure to the left for the whole fishery (above) and for the unit of fishing effort (below). The equilibrium at AR = MC is a stable equilibrium since the effort will increase when AR > MC and decrease when AR < MC. |
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