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Portfolio Fishing

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  • Baldursson, Fridrik Mar
  • Magnusson, Gudmundar

Abstract

The optimal fishing pattern in a multicohort fishery is determined using risk theory. Portfolio theory becomes applicable by treating different age groups of fish as different assets. A possibility set is derived using data on Icelandic cod fisheries. In the presence of risk aversion, it is shown that the abrupt behavior found in deterministic models is changed towards a smoother fishing pattern. The historical selection pattern for the Icelandic cod stock is shown to be near optimal using a maximal effort-type cost function but historical levels of effort are inefficient and lead to less profit and greater fluctuations than implied by profit or utility maximization. Copyright 1997 by The editors of the Scandinavian Journal of Economics.

Suggested Citation

  • Baldursson, Fridrik Mar & Magnusson, Gudmundar, 1997. " Portfolio Fishing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(3), pages 389-403, September.
  • Handle: RePEc:bla:scandj:v:99:y:1997:i:3:p:389-403
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    References listed on IDEAS

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    1. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
    2. Avinash Dixit & Peter Hammond & Michael Hoel, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," Review of Economic Studies, Oxford University Press, vol. 47(3), pages 551-556.
    3. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, pages 972-974.
    4. Heal, Geoffrey M., 1993. "The optimal use of exhaustible resources," Handbook of Natural Resource and Energy Economics,in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 18, pages 855-880 Elsevier.
    5. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, pages 972-974.
    6. Heal, Geoffrey M., 1993. "The optimal use of exhaustible resources," Handbook of Natural Resource and Energy Economics,in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 18, pages 855-880 Elsevier.
    7. Mitra, Tapan, 2002. "Intertemporal Equity and Efficient Allocation of Resources," Journal of Economic Theory, Elsevier, vol. 107(2), pages 356-376, December.
    8. Kirk Hamilton, 1995. "Sustainable development, the Hartwick rule and optimal growth," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 393-411.
    9. Dasgupta, Swapan & Mitra, Tapan, 1983. "Intergenerational Equity and Efficient Allocation of Exhaustible Resources," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 133-153, February.
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    Cited by:

    1. Jean-Pierre Aubin & Luxi Chen & Marie-Hélène Durand, 2013. "Dynamic decentralization of harvesting constraints in the management of tychastic evolution of renewable resources," Computational Management Science, Springer, pages 281-298.
    2. Sanchirico, James N. & Smith, Martin D. & Lipton, Douglas W., 2006. "An Approach to Ecosystem-Based Fishery Management," Discussion Papers dp-06-40, Resources For the Future.
    3. Frank Krysiak, 2009. "Sustainability and its relation to efficiency under uncertainty," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 297-315.
    4. Edwards, Steven F. & Link, Jason S. & Rountree, Barbara P., 2004. "Portfolio management of wild fish stocks," Ecological Economics, Elsevier, vol. 49(3), pages 317-329, July.
    5. Sanchirico, James N. & Smith, Martin D., 2003. "Trophic Portfolios In Marine Fisheries: A Step Towards Ecosystem Management," 2003 Annual meeting, July 27-30, Montreal, Canada 22191, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Sanchirico, James N. & Smith, Martin D. & Lipton, Douglas W., 2008. "An empirical approach to ecosystem-based fishery management," Ecological Economics, Elsevier, vol. 64(3), pages 586-596, January.

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