22


E is defined as fishing effort. Further assumptions of the model are as

follows. The demand curve facing the industry is assumed to be infi-

nitely elastic, which implies a constant price, p, and industry costs

are proportional to effort. Thus, the cost function can be written as


K = rE


(10)


where r corresponds to average and marginal cost of effort. These

equations are shown in Figure 5. Given the constant production price,

the total revenue curve shown is simply the catch function in equation

(9) multiplied by the product price p. Recalling Gordon's (1954)

result that all profit in a common property fishery is dissipated

through entry of new firms, the equilibrium position of an unregulated

fishery will occur at the point where total revenue is equal to total

cost.


Effort


optm E


Figure 5. Cost and revenue in an unregulated fishery
 with constant product price