Rent Dissipation in Chartered Recreational Fishing: Inside the Black Box

*C

q z (i)    χq             C *

— = — > ¹ → z (ⁱ) > z (i)                      (27)

qz^C(i)    χq^*

given the assumption of diminishing marginal productivity of inputs. Note, however, that this
increase in catch augmenting factors is not guaranteed to occur in general. When there are
multiple catch-quality-exclusive inputs, the move from optimal management to competition may
result in less of some inputs and more of others depending upon the nature of the catch quality
production function.²⁶ Nonetheless, this combination of inputs must generate a higher level of
catch quality than before such that the use of at least one input must exceed its level under
optimal management.

In the case where an input affects non-catch quality exclusively a comparison of (26) to
(17) reveals that the valuation of non-catch quality under competition and optimal management
is identical. There is, therefore, no direct incentive for the distorted use of this input. However,
indirect distortions may propagate due to possible substitution effects between catch and non-
catch quality in angler demand. For instance, if the two components of quality are substitutes
then the presence of excessive catch quality in pure competition will weaken demand for non-
catch quality, lowering its equilibrium value and thus causing the use of at least one of its
exclusive inputs to fall relative to the optimal input bundle.

In the case where some inputs contribute to both catch and non-catch quality, the
situation is much more complicated. In the case of non-catch quality, there may be a tendency to
substitute away from exclusive inputs and towards inputs that pay a “double dividend” by
contributing positively toward catch quality.²⁷ This substitution is driven by the excessive price

²⁶ A sufficient (although not necessary) condition for expansion of all exclusive catch quality inputs is homotheticity
of the quality production function.

²⁷ A corollary to this statement is that there will be a tendency to over-invest in catch-influencing inputs that act as
“bads” in the production of non-catch quality, particularly if the two quality metrics are highly substitutable to

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