Rent Dissipation in Chartered Recreational Fishing: Inside the Black Box



signal sent by the market for catch quality under perfect competition. The degree to which such
behavior is evidenced in practice depends a great deal on the degree to which shared versus
exclusive inputs are substitutable in consumer’s perceptions of non-catch quality, the relative
prices of these classes of inputs and the magnitude of the rift between the optimal and
competitive “price” of catch quality.

These cases are indicative of a labyrinthine and theoretically ambiguous relationship
between the distortions in the valuation of catch quality and potential feedback effects for
equilibrium non-catch quality. Outcomes depend on a number of factors involving the degree of
cost complementarities between the two forms of quality (which depends in turn on the nature
and importance of shared inputs in their joint production) and the degree of substitutability of
catch and non-catch quality in trip demand.

The determination of the number of vessels in long-run competitive equilibrium is
characterized by the elimination of all supranormal rents from the system. Mathematically:

MB(D*,H(X,q(Zq,N)),L,S(Zs,N))*D* -Nv *c(Zq,zs,N,NumTrips,w,r) = 0      (28)

Assume that the optimally managed steady state would generate positive rents to the industry and
now consider the “deregulation” of the system. Since anglers are no longer paying the implicit
dynamic cost of their fishing-induced mortality, the number of trips demanded increases.
Furthermore, the demand curve is shifted outward due to additional incentives on the part of
vessel owners to compete along margins of catch quality. Given that each vessel under optimal
management was operating at full seasonal capacity, it follows that the number of vessels in the
fishery must increase under the competitive open access scenario. Fixed costs, downward

consumers and these inputs are not easily substituted for in the production of catch quality. For instance, vessels
may over-invest in noisy but powerful engines in order to increase fishing time. This would likely increase catch
quality but diminish the aesthetics of the trip in a way that reduces angler welfare.

22



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