|Abstract or Summary
- The Pacific salmon market may often be characterized by
disequilibrium conditions and less than perfect information. Thus the
study of the decision-making behavior, especially short-run pricing,
of wholesale market participants in this industry requires the use of
alternative models to the conventional, price-taking, perfect
competition model of the firm.
This study makes use of concepts advanced in the previous
literature on disequilibrium markets and imperfect information, as
well as known characteristics of the Pacific- salmon industry, to
hypothesize a model of decision-making by buyers and sellers. Sellers
determine an optimal asking price based on various indicators to the
firm of where its unknown, but downward sloping, demand curve lies,
as well as on costs. The reaction of buyers to the asking price is
specified, as is implicitly the reaction, in turn, of sellers to
The model is estimated empirically with the use of weekly data
from invoices of wholesale transactions of Pacific salmon for a number
of firms. These data represent a unique and rich source of
information to the researcher examining decision-making in the firm.
Additional information, such as dates of fishing seasons and landings,
costs to processors and certain proxy variables, assist in the
analysis of the invoice data.
Empirical estimation of the model is performed on nineteen
subsets of the data, classified by type of salmon product and by firm.
The results for the asking price equation reveal that for certain
cases seller behavior is consistent with the model of price-searching
behavior developed here. Furthermore, these results support previous
studies which hypothesize the role of various indicators in the
decision-making of the seller. In the case of the buyers' responses
to the asking price, however, the model does not appear to be
capturing some important factors. Some of the probable issues not
incorporated are discussed.
Ultimately, then, this research is designed to provide a better
understanding of the relationship between decision-making at the firm
level and associated market processes in a particular setting: the
U.S. Pacific salmon industry.