untitled

economic equilibrium is reached at which supply matches demand. This kind of open

market is highly idealized: in practice there may be collusion between suppliers, artificial

price supports imposed by external agencies (such as governments), or other barriers

that mitigate against a free market. It may be fairly reasonable, however, as a depiction

of economic interactions in a rural economy, such as that supplying game meat in

equatorial Africa or southeast Asia (Clayton et al. 1997; Fa and Peres 2001).

Now we are going to consider how sustainable resource levels are liable to respond

to variation in prices (Clark 1990; Milner-Gulland and Mace 1998). We will use some

of the relationships already derived, and rearrange terms to calculate a new relationship

based on price (p) and equilibrium harvest (Heq), the latter the relevant measure of

production in a renewable resource system. Recall the following:

pqEN−cE= 0

By dividing both sides of the top equation by effort and then rearranging terms we

get N=c/(pq). One then substitutes c/(pq) wherever Nappears in the second equa-

tion, leaving the following algebraic relationship between equilibrium harvest level

and resource price:

rmax

We plot this relationship with harvest levels on the horizontal axis and price on

the vertical axis (Fig. 19.16), so that the similarity to the classic supply–demand

curve is apparent (Fig. 19.15). To complete the analysis, however, we need to add a

demand line.

−

⎛

⎝

⎜

⎞

⎠

(^) ⎟
c
pq
J
K
K
K
L

1 −

⎛

⎝

⎜

⎞

⎠

⎟

⎡

⎣

⎢

⎢

⎢

⎤

⎦

⎥

⎥

⎥

c

pq

K

G

H

H

H

I

H

c

eq pq

= exp

⎛

⎝

⎜

⎞

⎠

⎟

HN r

N

K

eq exp=−max^ N

⎛

⎝⎜

⎞

⎠⎟

⎡

⎣

⎢

⎤

⎦

(^1) ⎥−
350 Chapter 19
12
10
8
6
4
2
0
0 20 40 60 80 100 120
Quantity
Price
Demand
Supply
Fig. 19.15Idealized
relationship between
supply and demand in
an open, competitive
market.