On international fisheries agreements, entry deterrence, and ecological uncertainty

A prerequisite for an international fisheries agreement (IFA) to be stable is that parties expect the benefits from joining the agreement to exceed the benefits from free riding on the agreement, and parties only comply with the agreement as long as this is true. The agreement, therefore, implicitly builds on an expectation of the ecological condition of the natural resource. Game theoretical models often assume that all parties have the same (often perfect) information about the resource and that the exploitation is an equilibrium use of the stock. As stated by experts in natural science, the fish ecology still has many open questions, for example how to predict population dynamics, migration patterns, food availability, etc. In some cases, parties disagree about the state, abundance, and migration of a stock, which can reduce the possibilities of reaching an agreement for exploitation of the stock. This paper develops a model and applies it to the North-East Atlantic mackerel fishery, in order to analyze an IFA under different ecological scenarios, and also combines the model with the economic theory of entry deterrence. The model is used empirically to determine whether the parties with original access to the resource have an advantage when forming an agreement with a new party in having the ability to fish the stock down to a smaller size and thereby prevent another party from entering into the fishery. With a basis in entry deterrence, combined with lack of information, the paper illustrates the obstacles that have made an agreement for the North-East Atlantic mackerel so difficult to achieve.

Two retailer-supplier supply chain models with default risk under trade credit policy

The purpose of the paper is to formulate two uncooperative replenishment models with demand and default risk which are the functions of the trade credit period, i.e., a Nash equilibrium model and a supplier-Stackelberg model. Firstly, we present the optimal results of decentralized decision and centralized decision without trade credit. Secondly, we derive the existence and uniqueness conditions of the optimal solutions under the two games, respectively. Moreover, we present a set of theorems and corollary to determine the optimal solutions. Finally, we provide an example and sensitivity analysis to illustrate the proposed strategy and optimal solutions. Sensitivity analysis reveals that the total profits of supply chain under the two games both are better than the results under the centralized decision only if the optimal trade credit period isn’t too short. It also reveals that the size of trade credit period, demand, retailer’s profit and supplier’s profit have strong relationship with the increasing demand coefficient, wholesale price, default risk coefficient and production cost. The major contribution of the paper is that we comprehensively compare between the results of decentralized decision and centralized decision without trade credit, Nash equilibrium and supplier-Stackelberg models with trade credit, and obtain some interesting managerial insights and practical implications.