ABSTRACT
The price of fish as delivered on the quay is observable; it depends on a number of factors, such as the total catch of fish. We shall assume in order to simplify that the price is given and constant. The characteristic feature of socially optimal fishing will then be this: that social marginal costs are equal to the price of the fish supplied on the quay. If less than this quantity is fished, the price for a kilo of fish delivered on the quay will be greater than would be the cost of catching another kilo of fish. It would then be worth while catching at least one extra kilo. If more than the right quantity were fished, the cost of fishing the last kilo would be greater than the price. In our simple model we shall therefore assume that it would be prudent to organise fishing in such a way that the social marginal costs are equal to the price of a kilo of fish delivered on the quay. We can express this adjustment in the following way, remembering our assumption with regard to constant unit costs:
Condition A
Price per kilo of fish caught and delivered at the quay - private unit costs = price per kilo of uncaught fish
Condition (A) tells us that the net price of a kilo of fish caught is equal to the price of an uncaught fish.
