Increasing Returns and Cycles in Fishing
Aalto University - Department of Economics
Peter M. Kort
Tilburg University - Department of Econometrics & Operations Research; Tilburg University - Center for Economic Research (CentER)
Andreas J. Novak
University of Vienna - Department of Statistics and Decision Support Systems
Tilburg University, CentER Working Paper No. 2000-57
We consider optimal fishery management under the assumption of increasing returns that is supported by previous empirical evidence. We improve the tractability and realism of the previous approaches by introducing flow adjustment costs on changes in harvest rate. Our framework is the first to provide a link between stable limit cycle policies and increasing returns in harvesting. The type of the harvest policy depends on flow adjustment costs: for relatively costly adjustments the usual steady state harvest policy is conceivable, whereas for relatively cheap adjustments the harvest policy is cyclical. We also show a connection between chattering control policies and limit cycles, which helps us to develop a clear economic meaning for cyclical harvesting.
Number of Pages in PDF File: 27
Keywords: Nonconvexities, Adjustment costs, Hopf bifurcation, Renerable resources
JEL Classification: C61, C62
Date posted: October 20, 2000
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