Price formation on the Marseille fish market: Evidence from a network analysis

► On a daily fish market, agents are not anonymous and this influences the outcome. ► Interactions matter and the social network analysis helps to understand the market. ► The data analysis reveals strong price dispersion for homogeneous or similar goods. ► The buyers adopt two different behaviours,...

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Bibliographic Details
Published in:Journal of economic behavior & organization 2011-09, Vol.80 (1), p.50-67
Main Authors: Vignes, Annick, Etienne, Jean-Michel
Format: Article
Language:English
Subjects:
Buyers
Competition
Competitors
Dynamic models
Dynamic panel model
Econometrics
Fish
Fish market
Fish production
Food prices
Information economics
Network analysis
Networks
Paradoxes
Price differentiation
Price dispersion
Price formation
Prices
Studies
Wholesalers
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Summary:► On a daily fish market, agents are not anonymous and this influences the outcome. ► Interactions matter and the social network analysis helps to understand the market. ► The data analysis reveals strong price dispersion for homogeneous or similar goods. ► The buyers adopt two different behaviours, i.e. loyal or nomad. ► Loyal buyers get advantages and represent a good solution for risk-adverse seller. The empirical analysis of fish markets always reveals strong price dispersion for homogeneous or very similar goods. The problem is how to explain this price dispersion on a market where there is no evident arbitrage. Explanations proposed by different authors include differences in organization, the characteristics of the good, and the influences of social interactions between buyers and sellers. In line with the last of these three approaches, we consider the fish market of Marseille as a seller–seller network. We start by examining the influence of market interactions, through a static and then a dynamic econometric model. We then analyze the role of the seller’s position in the network. We bring to light a surprising paradox, in that the sellers who share the most buyers with competitors ( i.e. the most central sellers) charge the highest prices.
ISSN:0167-2681
1879-1751
DOI:10.1016/j.jebo.2011.07.003