The influential work of Gordon (1954) and Schaefer (1957) drew attention to the economic factors in the management of one type of common-pool resource— fisheries. Gordon and Schaefer modeled the effect of fishing effort (the quantity of fish harvested from a fishery) on ecologically sustainable yields as well as calculating the economic results of varying levels of effort. The so-called Gordon-Schaefer model has dominated the study and execution of fisheries management since the 1950s. Both scholars assumed that at low levels of fishing effort in a newly opened fishery, yield increases rapidly as a function of effort but with diminishing returns as more effort is needed to harvest additional units of fish. Beyond the “maximum sustainable yield,” however, further increases in harvesting would result in a decrease of total harvest and revenue because replenishment of the fish stock was presumed to depend on the size of the current fish stock, which falls below the level necessary for full replacement once fishing extracts more than this yield. By including the revenue occurring from fishing (yield times the fish price) and the costs of fishing effort, they defined the “maximum economic yield,” that is, the fishing effort at which the difference between fishing revenue and costs is maximum, and the level of the fishing effort under open access. The relationships they described are illustrated in Figure 1-2.

As shown in Figure 1-2, the underlying relationship between fishing effort measured on the horizontal axis and cost measured on the vertical axis is linear, while the relationship to revenue, also measured on the vertical axis, is curvilinear. This is due to the presumed basic biological relationships involved in determining maximum sustainable yield. Yield increases with effort until the maximum sustainable yield is reached; beyond that, the fish stock can replenish only at a lower rate—the population is simply drawn down. Whether the population is sustainable depends on the behavior of the harvesters.

If no rules exist related to access or amount of harvest (an open access situation), the equilibrium is a harvest rate that is larger than either the maximum sustainable yield (in biological terms) or the maximum economic yield (the harvest that yields the maximum difference between prices obtained and costs of fishing effort) (see Figure 1-2). This is because each fisher takes into account only the costs of his or her own effort and not the increased costs that individual effort imposes on others. The maximum economic yield (achievable if the rules regulating access and harvesting practices limit effort to the economically optimal strategy) turns out to be less than the biologically maximum sustainable yield. Based on this analysis, resource economists argued strongly that fisheries and other common-pool resources would be better managed by a single owner—preferably a private owner. Government ownership was, however, consistent with their argument. The single owner could then determine the maximum economic yield and manage the resource so as to obtain that yield (see, e.g., Crutchfield, 1964; Demsetz, 1967; Johnson, 1972).