Ex-vessel price formation of fish in Iceland has been a stumbling stone within the fisheries for a long period of time. Fish as a raw material for processing has been sold either in direct sales or through auction markets leading to different prices. In many cases direct sales leads to considerably lower prices then the outcome on the auction markets. In this context it is attempted in this paper to cast some light on this issue by analysing the development of the price systems applied in the industry. Furthermore, we apply theoretical methods of contract theory to gain understanding of how the share system and contracts between owners of vessels and owners of on-shore facilities might influence the development of ex-vessel price of fish in Iceland. It is also discussed what problem of mesurement one has to tackle with when conducting empirical investigation of data regarding price of fish.
Key words: Price formation, direct sales, auction markets, the law of one price, share system, contract theory.
Matthiasson, T. and B. Valsson. Ex-vessel Price of Cod in Iceland Empirical and Contract-Theoretical Consideration. In: Microbehavior and Macroresults: Proceedings of the Tenth Biennial Conference of the International Institute of Fisheries Economics and Trade, July 10-14, 2000, Corvallis, Oregon, USA. Compiled by Richard S. Johnston and Ann L. Shriver. International Institute of Fisheries Economics and Trade (IIFET), Corvallis, 2001.