Title: The Effects of a Fishermen's Monopoly in the Market for Unprocessed Fish
Authors: Hannesson, Rognvaldur
Abstract: This paper considers the effects of granting a fishermen's sales organization exclusive rights to sell unprocessed fish. On the assumption that the fishermen's monopoly is able to discriminate between plants and end use alternatives in its pricing policy, the conditions for profit maximization are derived and compared with the conditions for social efficiency. It is found that the monopoly would be efficient if (I) its costs for obtaining the fish are identical to the social costs, (2) the marginal processing cost is constant, and (3) either the price of the finished product is constant or the product is exported so that consumer's surplus is not a part of the social benefit. A fishermen's monopoly may thus achieve the objectives of an export cartel. When the marginal processing cost is rising the monopoly will overconserve the fish resource, provided that its cost of providing the fish is not sufficiently below the social cost. Finally, the analysis is extended to the special case in which processors have established a price discriminating monopoly in the market for finished products but distribute the resulting profit through higher accounting prices while leaving individual processors to decide how much fish to buy for processing. This system passes the benefits from price discrimination in the markets for finished products on to the fishermen's monopoly.
Authors: Hannesson, Rognvaldur
Abstract: This paper considers the effects of granting a fishermen's sales organization exclusive rights to sell unprocessed fish. On the assumption that the fishermen's monopoly is able to discriminate between plants and end use alternatives in its pricing policy, the conditions for profit maximization are derived and compared with the conditions for social efficiency. It is found that the monopoly would be efficient if (I) its costs for obtaining the fish are identical to the social costs, (2) the marginal processing cost is constant, and (3) either the price of the finished product is constant or the product is exported so that consumer's surplus is not a part of the social benefit. A fishermen's monopoly may thus achieve the objectives of an export cartel. When the marginal processing cost is rising the monopoly will overconserve the fish resource, provided that its cost of providing the fish is not sufficiently below the social cost. Finally, the analysis is extended to the special case in which processors have established a price discriminating monopoly in the market for finished products but distribute the resulting profit through higher accounting prices while leaving individual processors to decide how much fish to buy for processing. This system passes the benefits from price discrimination in the markets for finished products on to the fishermen's monopoly.
