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This question was created from ECON 145 Economics of Ocean Resources2


what will the answer c.d.e.f will be if now assume that a regulator implements an optimal unit (ad velorum) tax on !EFFORT! iNSTEAD OF ON CATCH.


Now assume that a regulator implements an optimal unit (ad velorum) tax on
catch (output). Explain in one sentence for each question whether each aspect of
the fishery increases or decreases and the reason why in the new management
regime. Please illustrate the sole owner optimal equilibrium with the same figures
as you did for open access.
c. The average catch (efficiency) of each fishing vessel.
Average catch per vessel increase since fewer vessels
d. The size of the fishing fleet. (i.e. the amount of the total effort)
Size of fleet (total effort) declines since E that maximizes economic
rent < E of open access bionomic equilibrium (profit = 0)
e. The total industry profit (revenue minus direct costs and opportunity
costs) earned by fishermen.
Total economic rent goes form zero in open access bionomic
equilibrium to maximum but fishers earn only a normal profit, since
total profit foes to society as tax receipts.
f. The total social welfare (industry profit plus revenue earned by society). .
Total economic rent goes from zero in open access bionomic
equilibrium to maximum.

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