Remaining competitive at the regional level: developing a local aquaculture industry

Aquaculture industry development has been recognized to be an important step in improving a state's economy. However, local producers are facing significant competition from international, national, and other state producers. In this paper, the focus is on competition among local producers. The...

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Bibliographic Details
Published in:Aquaculture economics & management 2007-01, Vol.11 (1), p.73-98
Main Authors: Borisova, T.A, D'Souza, G.E, Miller, D, Labys, W.C
Format: Article
Language:English
Subjects:
aquaculture
economic analysis
economic development
fish culture
fish farms
load producers
market competition
market prices
price competition
prices
retail marketing
trout
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Summary:Aquaculture industry development has been recognized to be an important step in improving a state's economy. However, local producers are facing significant competition from international, national, and other state producers. In this paper, the focus is on competition among local producers. The objective is to examine how interactions among industry participants determine prices and profitability of individual fish growers. The application involves the trout sector of the West Virginia aquaculture industry. Using a game theoretic framework, the Bertrand oligopoly model, and a combination of data from primary and secondary sources, price competition among producers is modeled under different supply and demand scenarios. Factors such as production volume and cost, location relative to market outlets, supply dependability, and proximity to other competitors and markets influence the profitability and competitive position of individual producers. Results also show that, as expected, the entrance of new growers results in a reduction of the sales price, and creates more favorable conditions for sales outlets. In contrast, the appearance of new sales outlets results in an expected increase in sales prices and producers' profits. Implications are derived for the West Virginia aquaculture industry and for other areas where an abundant natural resource base combined with a rapidly growing aquaculture industry are linked to a growing competition for markets and, hence, producer profitability and survival.
ISSN:1365-7305
1551-8663
DOI:10.1080/13657300701202742