| Summary: | Fisheries economics concentrates on solving the problem of economic overexploitation in fisheries. The field took its first steps, as a specialized study area within economics, in the early 1950s. The approach since then, for solving the problem of overexploitation, has mostly been one of neo-classical economics, with emphasis on the production side of the problem. A potential solution to the overexploitation problem is the privatization of fisheries in order to maximize long-term economic benefits. Recent studies have shown that prices and certain product characteristics are an important factor for determining the optimal management of fisheries. This study tries to establish a methodological approach to incorporate information on prices, characteristics and environmental quality into fisheries management. The study uses exports of cod fillets by Iceland to the United States as a case study for exploring import demand for specific products, and how import demand might feed back into the management process. The study uses co-integration methods to identify the most appropriate commodities in constructing a model of import demand for cod. Elasticities are then estimated using an Almost Ideal Demand System (AIDS) for disaggregated product groups. Finally, the study concludes by establishing a link between financial theory and fisheries economics in order to incorporate market information directly into fisheries management. This study suggests that using Minimum Information Management systems, and establishing a public market in trading of permanent quota shares, along with trading in financial options on quota shares, could provide the fisheries manager with important information on tradeoffs between risk and return from a particular fishery.
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