Rent Dissipation in Chartered Recreational Fishing: Inside the Black Box

The determination of quality-augmenting inputs under competition is explainable via a
similar sequential argument as made for angler density. The marginal condition that is satisfied
in competitive equilibrium for variable factors is:

^D*                                                    D ^*

∫[ÿ^y^^ (∙)H_qq_z(i) + MB_sS_z(i) ]dD   w_w(i)N + w_v(i) ] N + ^μιHqqz(i) = 0.           ⁽2⁵⁾

0N

This condition is identical to that in (16) except for the now predictable result that decision
making under unfettered competition fails to account for future mortality effects. Factoring (25)
as in (17) reveals:

D^*

= ^[wVN ( i ) N ⁺ wV ( i ) ] ^N^ ■

Note that the valuation of the marginal contribution of catch effectiveness to the “value of
marginal product” is overstated relative to the optimal case ( χ_q^C > χ_q^* ). The cost minimization
tangency condition in (16) continues to hold, only now the relative preference given to catch
quality in the quantity and composition of inputs is skewed toward excessive catch quality. In
other words, equilibrium catch effectiveness will be too high under pure open access competition
and some of the inputs that play a role in its production will see excessive use, notwithstanding
the fact that input costs will be minimized at the competitive levels of catch and non-catch
quality.

We now flesh out this insight for a couple of simple cases. First, consider the case where
catch quality is a function of a single exclusive input. If we take the ratio of conditions (17) and
(26) we find:

20

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