 Over-capitalization in fisheries with irreversible investment and factor substitutionKira Lancker Ecological Economics, 2025, vol. 233, issue C Abstract: A major problem for common pool resource regulation, such as fisheries management, is over-capitalization following investment irreversibility. Understanding theoretical implications of capital as an irreversible investment input better could help to avoid over-capitalization. This article analyzes the case where irreversibly invested capital can be substituted by flexibly adaptable inputs such as labor and fuel in a CES production function. Using Hamiltonian derivation and numerical simulation, I compare investment under open access and under a social planner case across different levels of factor substitutability. For reasonably large ranges of parameter values, initial over-capitalization is stronger for weaker substitution possibilities. This is caused by differential open access investment incentives, in particular due to faster initial reduction in biomass. Despite lower initial over-capitalization, better substitution possibilities may lead to a lower minimum biomass during transition, threatening biological sustainability. Policy-makers therefore should be aware of these twofold impacts. Keywords: Non-malleable capital; Fisheries; Overcapacity; Factor substitution; Stock elasticity; Bio-economic model; Optimal control (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:233:y:2025:i:c:s0921800925000679 DOI: 10.1016/j.ecolecon.2025.108584 Access Statistics for this article Ecological Economics is currently edited by C. J. Cleveland More articles in Ecological Economics from Elsevier |
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