It takes account of biological growth rates, carrying capacity, and total and marginal costs and revenues.
[1][2] This model can be applied in three primary scenarios: Monopoly; Maximum Sustainable Yield (biological optimum); and Open Access.
Monopoly firms produce less at higher prices than competitive markets.
The maximum sustainable yield (MSY) is the largest amount of biomass that can be collected annually for indefinite periods.
MSY assesses the productive capacity of the fishery, rather than demand or economic costs.