Portfolio Fishing

Fridrik Baldursson () and Guðmundur Magnússon

Scandinavian Journal of Economics, 1997, vol. 99, issue 3, 389-403

Abstract: The optimal fishing pattern in a multi‐cohort fishery is determined using risk theory.Portfolio theory becomes applicable by treating different age groups of fish as different assets. A possibility set is derived using data on Icelandic cod fisheries. In the presence of risk aversion, it is shown that the abrupt behavior found in deterministic models is changed towards a smoother fishing pattern. The historical selection pattern for the Icelandic cod stock is shown to be near optimal using a maximal effort‐type cost function, but historical levels of effort are inefficient and lead to less profit and greater fluctuations than implied by profit or utility maximization.

Date: 1997
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