A Stochastic Bioeconomic Model with Research

Abstract

This paper provides an incremental extension of a stochastic renewable resource model (Pindyck 1984) to include population dynamics research; i.e., the rate of accrual of information regarding the stochastic evolution of the stock, as a dynamic choice variable. While Pindyck models variance in stock growth as an exogenous parameter, our formulation endogenizes this variance and characterizes the impact of scientific information accrual on both the harvest decision and the present value of rents resulting from harvest activity. We illustrate the theoretical existence of an internal optimum in research effort using a numerical example.stochastic bioeconomic model, stochastic control, fisheries management, population dynamics research, renewable resource, uncertainty, Resource /Energy Economics and Policy, Q2, Q22, C61,