| Abstract: | This paper examines the optimal tax to achieve maximum economic yield (MEY) exploitation in a rational expectations model of a competitive open-access fishery. To analyze the dynamic evolution of resource use a structural model which explains the relationship between the firm and the industry is presented. The unregulated equilibrium is contrasted with the potential MEY. Conditions under which the unregulated equilibrium will be MEY are explored. In addition, a tax is devised which will cause non-MEY competitive exploitation to become MEY when the tax is implemented. |
