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Fisheries Economics & Policy: Maximum Economic Yield - YouTube
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ok let's say we have a stock of fish a
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population of fish and we see that the
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caches are steadily falling every year
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and it's probably from fishing too much
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or maybe the catch isn't falling it's
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staying about the same from year to year
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but we notice that the number of boats
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on the stock is increasing and the size
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of the boats is increasing and the
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technology they're using is becoming
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more advanced the amount of effort that
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seems to be going into fishing is
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increasing but the catches are not if
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there's more effort being put into
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fishing but there's not more fish being
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caught it's a pretty clear sign that the
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population is probably declining this
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exact thing happened to the Grand Banks
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Cod off the eastern coast of Canada the
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scientists who monitored the fish
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population calculated the fish stock was
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on the decline but the policymakers saw
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that there were still high catches from
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the fishermen and thought scientists
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with their math and their hipster
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glasses but the stock was indeed over
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fished and the catches weren't changing
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because of the increased technology
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because nothing was done the population
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continued to decline and eventually the
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catches did too as of now there's been a
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ban on fishing Cod for over 20 years
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because the population has been so low
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increasing effort without increasing
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catches is a sign of an unhealthy
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population anyways it may be clear that
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fishing needs to decrease on a
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particular stock but to what degree in
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this video we're going to look at what
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we should be aiming for in a fishing
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quota first let's try to model how fish
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populations behave let's say this line
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represents fish population this axis is
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population and this axis is time or
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something let's say there's not a lot of
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fish in the beginning so we're down here
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they're going to reproduce but at first
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their population isn't going to rise
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that fast because there's not a lot of
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fish reproducing as their population
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increases more and more fish reach
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sexual maturity and the population rises
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faster but then growth slows down as
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food and habitat space becomes scarce
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and then eventually the death rate
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equals the birth rate this is the
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highest population this particular
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environment can fit the carrying
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capacity in reality ecosystems are
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dynamic and this level is always always
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changing
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for example if some food sources are
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depleted or the fish find other food
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sources or if they move around and this
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is no small effect and when setting
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quotas we can't ignore that but for our
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model here we're just going to treat it
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as constant so what this is showing
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is that down here when the population is
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low the growth rate is low and also when
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the population is high the growth rate
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is low somewhere in the middle is where
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the fast growth is happening okay let's
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take this same information but model the
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population growth rate as it changes
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with the population we're assuming the
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population is the only thing that
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affects the growth rate so when the
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population is zero the growth rate is
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zero because there's no fish to
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reproduce at low populations the growth
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rate is low but as the population Rises
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then reproduction rises at some point
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food and habitat are starting to limit
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growth reproduction rates are still high
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but they're starting to decline the
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growth rate slows and slows until the
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carrying capacity is reached okay so
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this is basically showing the same thing
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as this other graph when the population
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is in the middle the growth is fast when
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the population is low or when it's high
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the growth is slower but what this graph
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can show us is what amounts of fish we
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can take and how it affects the
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population if the fish population was
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here then the fish is growing by this
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amount so we know we can take that
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amount and by next time the population
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wouldn't have changed if the population
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was still here but we took below that
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line then next period the population
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would be greater if we keep taking that
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amount the population will grow and grow
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and grow until it reaches here now we're
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at the growth line for this fish if we
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take this much again the population
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isn't going to change if the population
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we're here but we took this much fish
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then we're taking more than that periods
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amount of growth and next time the fish
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population will be lower if we still
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take that much the next period then it
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will be lower and lower and lower what
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I'm calling the period will depend
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entirely on the ecology of the fish and
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requires a bit more insight for
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simplicity we're just sort of assuming
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that it's the growth in between fishing
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seasons and it only depends on the
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population of the fish if you take a
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catch below the line the population will
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rise by next period if you take above
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the line the population will fall by
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next period catches along the line won't
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change the population so if you take an
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amount of fish in these areas here the
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catch is sustainable the population will
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change but only until it reaches the
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line in this way the line is an
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equilibrium for the catches but if the
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amount of fish is taken in this area
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then the population will decline keep
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taking in those areas and the population
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might collapse so it's always safer to
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be fishing when the population is high
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if the population is low we'll want to
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try to take an amount
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from below the line so the population is
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safely given room to grow okay so based
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on this how much should we be taking
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well of the caches along the line this
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point here allows us to take the maximum
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amount to fish each period this is the
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maximum sustainable yield taking any
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higher will result in a declining
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population so we could try to take a
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little bit less when the population is
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good just for safety I think this was
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actually an old basis for setting
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fishing quotas but it's pretty shallow I
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mean maybe it would be fine if our goal
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was to take as much fish out of the
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water as fast as we can but that's not
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our goal our goal or rather the
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fisherman's goal and Fisher women who
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will hereby be referred to collectively
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as fishermen fishermen will want to make
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as much money as they can
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for as long as they can so our goal is
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to maximize the economic rent from
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fishing and to do it sustainably for as
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long as possible if you're new to the
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term economic rent don't worry about it
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just think of it as profit for now the
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difference between the costs and the
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revenue there are some important
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differences between rent and profit
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which is why we're bringing it up but
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for here if you just think of it as
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profit you'll do just fine but I'm going
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to call it rent anyway so let's change
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this graph to reflect that we're trying
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to maximize the amount of money made
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instead of looking at what amount of
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fish is taken from period to period
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sustainably let's change this to what
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amount of money can be made sustainably
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from period to period the line changes
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from what caches are sustainable to what
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earnings are sustainable we're going to
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keep the line the same shape you can
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look at it like it's just whatever fish
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was caught was then sold and the price
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of fish isn't ever changing okay now
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this is a revenue curve the total
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revenue curve from the amount of fish
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caught for the bottom axis we have
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population but we're assuming the
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population is only changing because of
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what we are doing that is how much
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effort we're putting into fishing so
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let's track that instead and change this
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axis to fishing effort this is how the
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population will be experienced by the
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fishing industry on a cost and revenue
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basis the population is low then they
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have to put more effort into finding and
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catching fish because there's less fish
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to find there's less fish in every net
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effort is a term that refers to a few
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things it could refer to how long people
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are fishing or how many people are
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fishing or how advanced the fishing gear
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is it's about how much equipment is
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on the fish stock so more boats fishing
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more time spent fishing more advanced
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equipment more efficient techniques or
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all increasing the amount of effort
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while money and fish catch were directly
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related effort and population are
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actually inversely related as the
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population decreases more fishing effort
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is required to find out where they are
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and there's less fish in every net or we
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could look at it like the more effort
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put into fishing the lower the
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population will be but we want low
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effort over here and have the effort
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increasing so we're going to switch the
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axis so that high fish population is
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here and low population is over here as
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fishing effort increases so look at it
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like this we've come to a new stock the
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population is high because we haven't
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touched it yet and the more effort
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that's put into fishing the lower the
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overall population gets ok so now this
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graph is what are the sustainable
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earnings when certain amounts of fishing
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effort are put in let's say we come to a
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new stock at the beginning when the
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population is at carrying capacity the
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equilibrium catch is zero right the
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population is as high as it can be
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there's no net growth so there's no
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amount of fish that we can take without
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affecting the population if we put in
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some effort the equilibrium catch
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increases we freed up some room for the
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fish to grow and the growth rate
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increases so the equilibrium catching
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pieces but it's still of the high
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population is limiting the growth rate
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of the fish as we put in more effort we
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keep freeing up room for the fish and
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the growth rate increases until it
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reaches this point the maximum
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sustainable yield coming up to this
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point the population was still limiting
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growth a little bit but after this point
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it's the fact that the population is
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lower and there's less fish reproducing
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that's limiting growth and this trend
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continues until there's no more fish
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reproducing keep in mind we change this
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axis from population to effort with the
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old graph when we caught a certain
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amount of fish the population changed
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and we could sort of track how the
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population changed when certain amounts
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of fish were taken season to season but
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we can't do that with this graph there's
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no population anymore for example let's
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say we come to a new stock and we put in
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a ton of effort there's tons of boats
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fishing on it is the total revenue going
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to be this measly amount of money well
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no that first season they're going to
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catch a lot and the industry will have a
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high total revenue the relationship
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between effort and revenue for one
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season would look more like this the
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more effort you put in the more fish you
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catch
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until there's no more fish to catch here
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you can put in more effort but you're
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not going to make any more money but
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with this graph when we refer to this
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amount of effort being put in we mean
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after many seasons and an equilibrium
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has been reached
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remember that previous chart if we try
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to catch this amount the population will
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change until the catch equals the growth
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rate along the line this level showing
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the amount of fish that's taken is kind
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of like the effort kind of when we look
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at this graph we're assuming an
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equilibrium like that has already been
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reached this is after many seasons okay
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okay
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to determine the economic rent we need
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to know what the costs are let's pretend
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there's only one person fishing on this
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stock and fishing effort will measure
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just as the amount of time they're
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spending fishing the first week of
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fishing costs this much the second week
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costs this much the third well each week
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costs the same the total cost line is
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going to be a straight line we're just
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assuming additional units of effort
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extra weeks of fishing always cost the
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same amount okay
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to maximize economic rent we want the
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spot where the difference between the
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revenue and the costs is greatest there
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is an equation to derive it personally
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I'm just going to eyeball it it is here
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we can fish more and make more total
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revenue but the cost will increase by
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more from that point so the total
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economic rent will actually go down
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that's no good
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compare that to if we were back here and
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we wanted to put in more effort that
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total revenue increases by more than the
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total cost so we should be putting in
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more effort we can be making additional
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rent this spot is the maximum economic
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yield it's the amount of effort where
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the rent is maximized at the maximum
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economic yield the catch will be
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sustainable
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the rent is highs it can be everyone's
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happy and note that the maximum economic
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yield is at a lower fish catch send the
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maximum sustainable yield even though
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we're catching less fish more rent is
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being generated and also the population
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is larger so it will be more resilient
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to other stresses but the problem is
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fishermen don't study a graph pick this
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point and say I'm going to fish with
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this amount of effort they live day by
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day year by year trying to maximize
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their personal rent so we need to look
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at this graph in a different way let's
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look at it in steps to see how the
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fishermen are thinking we need to
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examine the marginal cost and marginal
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benefits let's say in between each of
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these lines is one week again we're
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still assuming this is
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one fisherman if the Fisher fishes for
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one week they'll make this much revenue
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and pay this much costs if the Fisher
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fishes for two weeks they're making this
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much revenue and paying this much in
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costs but the extra revenue of the
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marginal revenue from an extra week
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sketch is this amount the extra costs
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from an additional week is this amount
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the third week of fishing will give them
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this much additional total revenue and
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they'll have to pay this much additional
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total costs as I fill these in note here
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pass the maximum sustainable yield the
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total revenue is actually going down
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they would be spending so many weeks on
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the stock that the population is getting
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to a point where additional effort is
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damaging the fish's productivity okay
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how many weeks is the Fisher going to
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fish they'll fish until the marginal
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revenue is no longer greater than the
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marginal costs when the extra week of
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fishing costs more than the money from
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the fish again eyeballing it it looks
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about here where the marginal revenue
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equals the marginal costs they could
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spend another week fishing but they
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wouldn't catch enough fish to cover the
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cost of gas and labour and whatever it's
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just not worth it so they'll stop
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interesting one person fishing alone
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will stop fishing at the maximum
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economic yield which is great in all but
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a stock of fish is almost never fished
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by one person okay so what happens when
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the stock of fish is under an
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open-access scenario fished by multiple
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people they're going to be fishing with
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slightly different incentives so let's
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change this up we'll use the same chart
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but this time let's measure fishing
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effort as the number of boats on the
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water this will be just for simplicity
[758]
this will be the same effect whether
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we're talking about increasing
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technology or creasing amount of time
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they're each spending fishing any other
[765]
effort measure the important thing is
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there are multiple people using the
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resource now one fisherman will stop at
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the maximum economic yield if you kept
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fishing he could make more money but not
[774]
enough to cover those new costs it's the
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same thing with multiple boats and if
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the industry were acting as a single
[781]
unit they wouldn't add any additional
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boats the additional catch doesn't cover
[784]
the additional costs but the new boat
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doesn't see it that way they're not
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getting this amount of revenue which
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wouldn't cover the costs right they're
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there with everyone else they share a
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total of the revenue of the industry the
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total number of fish caught and the
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revenue only increased by a little bit
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but they're not making decisions based
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on that they only see their share
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okay so an individual or a group acting
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as an individual will think does this
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extra effort make the whole pie bigger
[809]
No then screw it but working within a
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group that's not working together people
[814]
will think does this extra effort make
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my slice bigger the individual has the
[818]
opportunity to gain more by in essence
[820]
trying to get a bigger portion of the
[822]
pie so if we assume the fishermen always
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share an equal portion of the catch then
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they're each coming away with just the
[828]
total revenue divided by the total
[830]
number of boats okay so it's this line
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here in between each of these lines is
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no longer one week but the amount of
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effort that one boat puts in each boat
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makes this amount in revenue and spends
[840]
this amount in costs okay so this was
[843]
where an individual would stop fishing
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more effort means less rent but here the
[847]
extra person coming in can earn some
[849]
additional rent by basically taking a
[851]
little bit of everyone else's remember
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back there at the maximum economic yield
[855]
was where rent was maximized we're only
[857]
going down in rent by going forwards but
[859]
people will keep entering the fishery
[861]
because they don't see it that way even
[862]
past this point when the total revenue
[864]
is actually decreasing the new fishermen
[866]
still see rent to earn people will keep
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entering the fishery until that is no
[870]
longer the case that is here when the
[873]
total revenue equals the total costs now
[875]
when you boat won't enter the fishery
[877]
they would buy a boat hire a crew and
[878]
never find enough fish to cover those
[880]
costs this is the amount of effort that
[882]
a group under open access will put in at
[885]
this point the total revenue equals the
[887]
total costs and there's no rent being
[889]
made there's less rent being made and in
[891]
this case less fish being caught and
[893]
significantly more effort being put in
[895]
than back at the maximum economic yield
[897]
also they could have got the same amount
[899]
over here for way less effort and way
[901]
more rent and now we're potentially in a
[904]
danger zone for collapse this is all
[905]
less than ideal we want to be fishing
[907]
back here at the maximum economic yield
[909]
while one fisherman will stop there
[911]
anyway a group needs extra incentive to
[914]
cooperate and that's our next goal and
[916]
the rest of this series we're going to
[917]
look at a few more challenges facing
[919]
fishing industries today and then what
[921]
are some things we can do to try to
[922]
structure a fishery so that people fish
[924]
at the maximum economic yield where
[926]
population is relatively healthy and the
[928]
rent is high
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