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https://ir.library.oregonstate.edu/concern/conference_proceedings_or_journals/ks65hf43j

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  • When climate change alters the distribution of fish stocks, stocks that were previously owned by a single country can suddenly become shared between countries. Current models predict that in such cases, if no agreement on management is formed, stocks may be severely depleted. A similar problem arises when a new member to an international fishing agreement emerges. However such models ignore the strategic importance of sunk costs. Countries moving into new fisheries will typically have to incur sunk costs to invest in a new fleet, or to retrofit an existing fleet. I develop a dynamic discrete time game to show the important consequences of these sunk costs.
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