Output Substitution in a Regulated Fishery

Production condition and behavioural reactions have traditionally been modelled in unregulated industries. The paper examines the impact that output regulation will have in an industry of multiple outputs where production of regulated and unregulated outputs are combined. The industry's respond to output regulation is critical depending on whether the regulated and unregulated outputs are produced as complements or substitutes in the production process. The elasticity between restricted and unrestricted outputs measure the output transformation in the regulated industry. Applied on a regulated fishery that consists of revenue maximising firms the paper examines how a tightening of the output regulation will affect the exploitation of the unregulated fish resources.