A Model of Regulated Open Access Resource Use

2
HOMANS AND WILEN
fisheries were virtually unregulated and operating under open access conditions.
H. S. Gordon’s 10
important paper had just appeared, pointing out how open
access fisheries inevitably dissipate potential rents and as a result, economists’
early discussions about regulations focused on normative issues such as: how can
regulations be designed in order to coax an open access fishery closer to a rent
maximizing ideal? The extension of jurisdiction by coastal nations in 1976 changed
the institutional context of fisheries dramatically since virtually all of the most
important fisheries suddenly came under the authority of adjacent coastal nations.
This important change set the stage for a new era of regulated fisheries use by
legitimizing coastal nations’ authority to explicitly manage the use of their fisheries.
As coastal nations have begun to exert more regulatory control over their
adjacent fisheries, economists have continued to focus primarily on normative
issues associated with regulatory design. There have been several important policy
contributions emerging from this work. Economists were instrumental, for example,
in framing management legislation Ž such as the Magnuson Act.
in a manner
that incorporated socioeconomic as well as biological goals and in promoting
rationalization schemes including limited entry and transferable quota schemes.
Interestingly, however, in their descriptive analytical and empirical work, economists
have continued to depict fisheries as if they are still operating under pure open
access conditions. This is in spite of the fact that most modern fisheries are heavily
influenced by regulatory structures which proliferated especially after the extension
of coastal jurisdictions at the end of the seventies.
A question which might be asked is, why not simply incorporate regulations as
technological constraints and treat them as a minor modification of the basic open
access model? The answer to that question is that the regulatory structure is
fundamentally more important than this, particularly as a force affecting the
character of fisheries in the long run. Moreover, regulatory constraints are not
simply exogenous but instead are fluid and an outcome of purposeful behavior by
institutions with goals and objectives. The menu of regulatory instruments is often
extensive and regulators actively choose both the suite of instruments and their
respective levels in a manner that reflects current and expected future conditions
in each fishery. When external factors change, regulations also change in response
and hence regulations are fundamentally endogenous and dynamic.
The implications of these observations are at least three. First, the technological
and behavioral character of modern fisheries is intimately bound up with the
nature and operation of the regulatory structure. Not only will technology and
behavior be affected by the regulatory structure, but so also will the health and
attributes of the harvested species. Second, discussions of policy alternatives need
to measure the gains from rationalization relative to the appropriate status quo.
Regulated fisheries may look considerably different from what would emerge
under pure open access and they may, in fact, even be generating substantial
economic rents. Finally, modeling the evolution of fisheries and particularly forecasting
future conditions must account for not only the dynamics of the biomass
and the technology and behavior of the industry but also the dynamics of the
behavior and technology of the regulatory apparatus. This places an even greater
burden on modelers to know and understand the particular features of the fisheries
they are modeling.
In this paper we present a model of a regulated open access fishery which we
believe more accurately captures some of the features of modern fisheries. It is