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The use of the notation P(m) here implies that price is constant with

respect to variations in firm output, but does vary with changes in mesh

size due to the change in the size of fish caught.

 Individual firm behavior is assumed to follow a profit maximization

goal with vessel catch rate, x, and mesh size, m, being the decision

variables. The profit function for the individual firm can thus be

expressed as

 S= P(m)x ((x, X, m, V) v (17)


Maximization of this function yields the following first-order

conditions:

 P(m) = cl(x, X, m, V) (17a)


 P'(m)x < c3(x, X, m, V) if < m = m (17b)


The inequality occurring in equation (17b) holds when the solution is

such that mesh size is below the point of technological feasibility.

Equation (17a) states the familiar profit maximization condition that

marginal cost equals price. Interpretation of equation (17b) is less

clear. In general, it states that the marginal revenue of varying mesh

size must equal the marginal cost of doing so. It may be, however, that

the mesh size which satisfies this condition is below that which is

technologically feasible. Hence, the inequality becomes effective in

this case and the optimal mesh size is assumed to be mrn.

 The foregoing illustrates the determination of the optimal (profit

 maximizing) levels of firm catch and mesh size. The rate of exit or

 entry of firms operating at these levels is given by