cross state price effects exist. The implication here is that maximiza-

tion of profit on a state by state basis fails to reflect the cross

state price effects. However, maximizing all state profit functions

simultaneously serves to internalize these pecuniary externalities.

 The basic structure of the empirical model of the GMRFF is that of

a constrained optimization problem. The objective function is composed

of the summation of the estimated state total revenue functions minus

the summation of state total cost equations. Constraints are defined by

derived equilibrium forms of the estimated state catch equations. In

obtaining the components of the model, several adjustments were

necessary. These adjustments are discussed below.


Total Revenue Equations


 The total revenue component of the objective function corresponds

to the summation of the individual state total revenue equations. The

total revenue function for each state is obtained by multiplying the

estimated price equation by the corresponding quanity of catch. The

price equations were estimated from data for the years 1957 to 1975,

inclusive. To obtain total revenue expressions corresponding to 1979

levels, the time trend component of the price equations was set to a

1979 level. Under the assumption that the estimated parameters of the

price equations remained constant during this period, the estimated

total revenue functions for 1979 were derived by multiplying the

"inflated" price equations by the corresponding catch of reef fish.


 The trend variable, t, is defined such that it takes a value of 1
for the year 1957, 2 for 1958 and so on. To "inflate" the price equa-
tion to 1979 levels, t was set at 23 corresponding to 1979. The result-
ing constant was then subsumed into the intercept of the price equation.