ABSTRACT
The marine life in the Barents Sea supports two major fisheries — a fishery for cod and other demersal species, and a purse seine fishery for capelin. 2 It is known that there is a predator—prey relationship between cod and capelin. The purpose of this chapter is to study the economic effects of this biological interrelationship under different management arrangements. A model that captures this relationship is developed; thereafter a numerical method is applied to compute various equilibrium solutions of the model. First, Nash non-cooperative equilibrium solutions are determined when the two stocks are managed separately by their respective owners. Second, joint management equilibrium solutions are identified by assuming that exploitation and management of cod and capelin are carried out by a sole owner. 3 The latter solution is best in the sense that the sole owner is expected to internalize the externalities that are bound to originate from the natural interactions between the two species. Third, the exploitation of only cod is allowed in order to isolate the economic merits of allowing cod to feed on capelin while only cod is caught for human consumption. Note that cod is the more valuable of the two species.
