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216 • Microeconomicsmen will enter as long as there are profits to be made. 8 New entrants willpush the stock down to N 2 , at which π = zero, or (TR = TC). At N 2 manymore resources are going into fishing, but the sustainable catch is less thanat N 1 , and no one is making a profit. 9Curve TC′ depicts lower harvest costs, which might come about froma technological advance such as sonar devices for locating fish schools. Atthese lower costs, in an open access fishery it would be profitable for newfishermen to keep entering the fishery even after harvests become unsustainable.This is the case where the tragedy of open access resources maywell lead to extinction and may be a realistic depiction of what was happeningwith North Atlantic cod and many whale populations before regulationbegan. Competition in this case leads to a race to catch theremaining fish before someone else can.And what happens if we relax our assumption about constant pricesand instead assume that prices increase as harvests decrease? However,the total revenue curve would still equal zero at minimum viable populationand at K but would otherwise shift up where harvests were low anddown where harvest are high. As stocks became too low to sustain higherharvests, profits would increase, attracting more fishermen into the industryand increasing the risk of unsustainable levels of effort. However,the single annual profit-maximizing owner would end up harvestingfewer fish from a larger stock.Box 12-1Annual Profit Maximization inWild vs. Bred PopulationsBefore leaving the annual profit-maximizing approach, we’ll use it to distinguishbetween the exploitation of wild and bred populations. The fisheryexample we have used is, of course, the case of a wild population. Acatfish pond would be an example of a bred population. In both cases,the biological population growth function is similar. But the cost functionsare very different. For a wild population, costs are mainly costs ofcapture. For a bred population, costs of capture are minimal, but thecosts of feeding and confinement are high.8 Profits, in economic parlance, are returns above and beyond the cost of production, wherethe cost of production obviously includes wages. For a small fishing crew sharing returns, profitswould mean higher wages than they could find elsewhere.9 Note that if total costs are high enough, it is possible that the open access equilibrium mightbe at a greater yield than the profit-maximizing equilibrium, though with a lower stock and stillwith zero profit.