Abstract
In this paper we analyse a fishery resource exploitation model in which a single firm or a cartel has leased the rights to manage the resources independently. Two variables, resource level and the capital level, determine the dynamics of the resource system. The leasing contract includes an incentive for the agent to maintain the resource level high. The main result is that sole-agent resource management and efficiency of the resource use do not necessarily imply that the fishery is stabilized at a unique steady state level. Instead, the optimal resource exploitation may lead to periodic capital investments in fishing vessels and gear which in turn causes cycles in the resource economy. We show analytically that nonzero discount rate and low capital depreciation rate both favor the conditions under which periodic optimal solutions may occur. Simulation results related to a Baltic herring fishery are used to illustrate the results.
References
Barbier EB (1991) Environmental degradation in the Third World. In: Pearce D (ed) Blueprint 2: Greening the world economy. Earthscan London
Berkes F (ed) (1989) Common property resources. Ecology and community-based sustainable development. Belhaven Press London
Bjørndal T (1987) Production economics and optimal stock size in a North Atlantic fishery. Scandinavian Journal of Economics 89:145–164
Bjørndal T, Conrad JM (1987a) Capital dynamics in the North Sea Herring fishery. Marine Resource Economics 4:63–74
Bjørndal T, Conrad JM (1987b) The dynamics of an open access fishery. Canadian Journal of Economics 20:74–85
Brown G Jr (1992) Hierarchical renewable resource management when harvesters don't cooperate. Department of Economics, University of Washington, Discussion papers
Clark CW (1976) Mathematical bioeconomics: The optimal management of renewable resources. Wiley-Interscience New York
Clark CW (1982) Concentration profiles and the production and management of marine fisheries. In: Eichorn W, Henn R, Neumann K, Shephard RW (eds) Economic theory of natural resources. Physica Verlag Würzburg
Clark CW, Clarke FH, Munro GR (1979) The optimal exploitation of renewable resource stocks: Problems of irreversible investment. Econometrica 47:25–47
Clemhout S, Wan H Jr (1985) Cartelization conserves endangered species? In: Feichtinger G (ed) Optimal control theory and economic analysis II. North Holland Amsterdam
Dewees CM (1989) Assessment of implementation of individual transferable quotas in New Zealands Inshore fishery. North American Journal of Fisheries Management 9:131–139
Dockner E, Feichtinger G (1991) On the optimality of limit cycles in dynamic economic systems. Journal of Economics 53:31–50
Efta (1989) Decision of the Council 6 of 1989. Adopted at the 12th Meeting of 14 June 1989. Text and appendices
Feichtinger G, Hartl RF (1986) Optimale Kontrolle ökonomischer Prozesse. De-Gruyter Berlin New York
Feichtinger G, Kaitala V, Novak A (1992) Stable resource — employment limit cycles in an optimally regulated fishery. In: Feichtinger G (ed) Dynamic Economic Models and Optimal Control. North-Holland Amsterdam 163–184
Feichtinger G, Novak A (1992) A note on the optimal exploitation of migratory fish stocks. Journal of Dynamics and Control 2:255–263
Feichtinger G, Novak A, Wirl F (1994) Limit cycles in intertemporal adjustment models — theory and applications. Journal of Economic Dynamics and Control 18:353–380
Folke C, Hammer M, Jansson A-M (1991) Life-support value of ecosystems: A case study of the Baltic Sea Region. Ecological Economics 3:123–137
Guckenheimer J, Holmes P (1983) Nonlinear oscillations, dynamical systems, and bifurcation of vector fields. Springer New York
Hannesson R (1983) Bioeconomic production function in fisheries: Theoretical and empirical analysis. Canadian Journal of Fisheries and Aquatic Sciences 40:968–982
Hardin G (1968) The tragedy of commons. Science 162:1243–1248
Hassard BD, Kazarinoff ND, Wan Y-H (1981) Theory and applications of hopf bifurcation. London Math Society Lecture Notes 41
Helgason T (1991) The iceland quota management system. A description and evaluation. Science Institute University of Iceland Research paper RH-3-91
Hildén M, Kaitala V, Leitmann G (1994) Stabilizing management and structural development of open-access fisheries. In: Basar T, Haurie A (eds) Advances in Dynamic Games and Applications 1:318–338. Birkhäuser
Kaitala V, Hämäläinen RP (1981) A differential game model of the non-cooperative management of an international fishery. Proceedings of the First International Conference, Applied Modelling and Simulation, Life, men and societies V: 183–186
Kaitala V, Hildén M, Leitmann G (1992) Income subsidizing and fisheries development — An analysis of stabilizing management. In: Feichtinger G (ed) Dynamic Economic Models and Optimal Control 189–203 North-Holland, Amsterdam
Long NV (1991) Optimal exploitation of migratory fish stocks: The multiple species case. In: Arnason R, Bjørndal T (eds) Essays on the Economics of Migratory Fish Stocks 55–68. Studies in Contemporary Economics. Springer New York
Mickwitz P, Hildén M (1991) A new option for regulation of the salmon fishery — Personal auctionable quotas 8–9. (in Finnish) Kalastaja
Scott AD (1955) The fishery: The objectives of sole ownership. Journal of Political Economy 63:116–124
Smith VL (1969) On models of commercial fishery. Journal of Political Economy 77:181–198
Ulltang Ø (1980) Factors affecting the reaction of pelagic fish stocks to exploitation and requiring a new approach to assessment and management. Rapports et Proces-verbaux des Reunions 177:489–504
Wirl F (1991) Complex dynamic environmental policies. Presented at the Sixth Annual Congress of the European Economic Association, Cambridge (UK) August 31–September 2
Young MD (1992) Sustainable investment and resource use. Equity, environmental integrity and economic efficiency. UNESCO's Man and the biosphere series 9 Parthenon Publishing Group London
Author information
Authors and Affiliations
Additional information
This research was partly supported by the Austrian Science Foundation under contract number P7783. The support of the Academy of Finland and Yrjö Jahnsson Foundation to V. K. is greatly appreciated. We thank Carl Folke, Mikael Hildén and Steffen Jørgensen and three anonymous referees for helpful comments. V. K. thanks the Beijer Institute of the Royal Swedish Academy of Science for its hospitality.
Rights and permissions
About this article
Cite this article
Novak, A., Kaitala, V. & Feichtinger, G. Resource leasing and optimal periodic capital investments. ZOR - Methods and Models of Operations Research 42, 47–67 (1995). https://doi.org/10.1007/BF01415673
Received:
Revised:
Issue Date:
DOI: https://doi.org/10.1007/BF01415673