Abstract
The role of game theory (the theory of strategic interaction) in the economics of the management of world capture fisheries resources has evolved gradually over time. If the commencement of modern fisheries economics can be seen to be marked by the publication of H. Scott Gordon’s seminal 1954 article, it can be said that, for the first quarter-century of modern fisheries economics, game theory played a negligible role. There was no perceptible strategic interaction, or at least none seen worth bothering about. All of this changed with the advent of the 1982 UN Convention on the Law of the Sea and the EEZ regime. Coastal states establishing EEZs were forced to recognize that some of the fisheries encompassed thereby would be shared with other states. Since strategic interaction between and among states sharing these international fishery resources is central to the management of the resources, fishery economists analysing such management had no choice but to bring game theory to bear. The steadily increasing complexity of international fishery management brought forth the need for game theory models of greater and greater sophistication. The application of game theory to the economics of the management of national, or intra-EEZ, fishery resources, on the other hand, has lagged far behind such application to international fisheries management. This is now changing, as the strategic interaction among the relevant fishers, and between the fishers and the resource managers, can be ignored no longer. The application of game theory to the economic analysis of the management of national fisheries stands as the “new frontier”.
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Notes
- 1.
Thus, for example, the great scientist of the nineteenth-century Britain, Thomas Huxley, stated in 1883 that the best fisheries management is no management, because of the inexhaustible nature of the fishery resources (cited in Bjørndal and Munro 2012, 7).
- 2.
Gordon assumes implicitly that the fishery resource is by no means inexhaustible.
- 3.
A prominent book of the time, which does, in fact, discuss in detail international attempts to control fishery exploitation, is The Common Wealth in Ocean Fisheries, by economists F. T. Christy and A.D. Scott. There is not even a hint in this discussion of the significance of strategic interaction among the states involved (Christy and Scott 1965, Chap. 11).
- 4.
The reader will recall that a fundamental assumption underlying the model of perfect competition is that there are no significant barriers of entry to or exit from the industry.
- 5.
A distant water fishing state is a fishing state, some of whose fleets operate well beyond domestic waters. While it is common to think of DWFSs as developed fishing state, e.g. Japan and Spain, there are developing fishing state DWFSs, as well, e.g. Ecuador, Mexico and Thailand. The typical DWFS is, of course, also a coastal state.
- 6.
The UN did, in fact, introduce another category, highly migratory stocks, e.g. tuna. These wide-ranging stocks do, by their very nature, cross the EEZ boundary into the adjacent high seas. The UN then defined straddling stocks as all other fish stocks crossing the EEZ boundary into the adjacent high seas. The distinction between the two arose out of bargaining in the UN Third Conference on the Law of the Sea. It has long been recognized that the distinction makes neither biological nor economic sense. This has led to the practice of combining the two into straddling stocks broadly defined (Munro et al. 2004).
- 7.
The United States and Canada, for example, both established EEZs unilaterally in 1977.
- 8.
The UN Convention on the Law of the Sea, as noted, was obviously not finalized, until 1982. However, Article 63(1), as it appeared in the draft of the Convention available in the second half of the 1970s, was identical to that which appeared in the final version of the Convention.
- 9.
Let a simple example suffice. Suppose that there are two coastal states, A and B, exploiting a transboundary fish stock. Except in unusual circumstances, the harvesting activities of the A fleet in the A EEZ will have an impact upon the harvesting opportunities open to the B fleet in the B EEZ, and vice versa—hence the strategic interaction.
- 10.
Munro happened to be very fortunate. At that very time, Munro’s Department of Economics at the University of British Columbia (UBC) had a visitor from MIT, who presented a paper on optimal pricing policy for OPEC, with OPEC members having different views on such policy (Hnyilicza and Pindyck 1976). The visitor and his co-author employed John Nash’s model of a two-player cooperative game (Nash 1953), largely ignored by economists up to that point. Munro asked himself if and how the game-theoretic analysis could be applied to the economics of transboundary fish stocks management. His colleague and co-author, Colin Clark of the UBC Department of Mathematics, provided invaluable assistance. By further chance, the UBC Department of Mathematics had in residence at that time a prominent visitor from Paris, who was a specialist in game theory.
- 11.
Having said this, Chap. 2 will make apparent that the distinction is in fact not clear-cut. While one can think of non-cooperative games that are strictly non-cooperative, cooperative games have non-cooperative games lurking in the background. Indeed, the alert reader will detect this in the discussion to follow.
- 12.
In later chapters, side payments will be referred to as transferable utility.
- 13.
It also led him to advance what he referred to as the Compensation Principle (Munro 1987). Consider a two-player fishery cooperative game, where, due to the aforementioned asymmetries, the players have different views on the optimal resource management policy. The Compensation Principle states that, in the case described, it will almost invariably be found that one player places a greater value on the resource than does the other. Optimal management calls for the player placing the greater value on the resource to dominate the resource management policies. In order for all of this to be feasible, that player must be prepared to compensate the other player through side payments.
- 14.
Another, but lesser, limitation of the Munro analysis is that it relies entirely upon the Nash model of cooperative games. There are other valid alternatives, a point made forcefully by Armstrong (1994).
- 15.
UN Conference on Straddling Fish Stocks and Highly Migratory Fish Stocks. See no. 6.
- 16.
The full title of the Agreement is: Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks.
- 17.
See no. 5.
- 18.
Which means, in effect, that the management of the entire stocks must be addressed.
- 19.
Pacta tertiis nec nocent nec prosunt.
- 20.
Customary international treaty law is treaty law, which is so widely accepted and practiced, that states, which have not ratified the treaty, are bound to accept the treaty’s provisions, unless they state explicitly their unwillingness to do so (Buergenthal and Murphy 2002). It is not clear to these authors whether the Agreement has, or has not, achieved the status of customary international treaty law.
- 21.
We refer to strictly transboundary fish stocks, because, as it will be recalled, a fish stock can be both transboundary and straddling in nature.
- 22.
In theory, free riding could also be a problem in the economic management of transboundary fish stocks. Nonetheless, the evidence indicates that free riding is, in fact, not a major issue in the management of such stocks (Munro et al. 2004).
- 23.
Included in which there is a detailed exposition on the Compensation Principle. See no. 13.
- 24.
See in particular: Munro et al. (2004), Parts 3.2.1–3.2.4, inclusive.
- 25.
Two of the authors of this book were invited to make presentations at the workshop.
- 26.
- 27.
There are also schemes referred to as community-based fisheries management, or territorial use rights fisheries (TURFs). These are best thought of as fisher cooperatives having a specific geographical location.
- 28.
Principal-Agent analysis in fisheries is a further topic to be discussed in Chap. 7.
- 29.
The Pacific Canada fishery in question will be reviewed in detail in a case study in Chap. 7.
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Grønbæk, L., Lindroos, M., Munro, G., Pintassilgo, P. (2020). Introduction to the Application of Game Theory in Fisheries Management. In: Game Theory and Fisheries Management . Springer, Cham. https://doi.org/10.1007/978-3-030-40112-2_1
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