Pricing Strategies for a renewable Resource Industry Faced with Competing New Technology: The Case of Aquaculture and the Commerical Fishery

Technological change in the form of aquaculture is becoming an important factor m the market for several species of fish. In the light of those changes, producers in some ocean-based fishenes need to evaluate their production and pricing strategies relative to their emerging competitor-aquaculture. This paper conceptually analyzes the optimal pncmg and production strategy for an ocean-based fishery facing a decreasing lagged demand resulting from the entry of competitive aquaculturalists. The optimal strategy consists of initially raising the pnce to a maximum level to earn some fast profits, taking advantage of the lagged decline m net demand. After the demand dechnes and natural fish stocks are reduced such that the singular arc is reached, price 1s adjusted downward to mamtam the singular arc approach to the long-run equilibrium. In the long run, price will be lower, natural fish stocks higher, and natural fish supply either lower or higher depending on the initial pos1t10n of the system and the magnitude of the net demand shift.