Capacity Utilization under Uncertainty: A Theoretical Approach in Fisheries Bioeconomics

This paper emphasizes on capacity utilization, highlighting the uncertain transition from unutilized to utilized capacity as a critical aspect of the fishing process. Our approach involves deriving a fishing function to represent fishing technology and Bellman equations to depict the economic dynamics of fisheries. By incorporating the dynamics of fish stock under exploitation, we construct a stochastic bioeconomic model of fisheries under rational expectations. In the context of open access fisheries, we deduce the fishing engagement rule that, in long run equilibrium, the ex-vessel price must cover both the landing and average search opportunity costs. We analyze the stability of fishing pressure and stock. Our results indicate that fishing decreases the carrying capacity in the long run. However, except under conditions leading to extinction, the fishery remains sustainable.