Competition in a fish auction: The case of Atlantic cod in Northern Norway

Abstract

This study investigates the role of bidder numbers in fish auctions, a neglected area of past research and one that is of key importance for optimal use of limited marine resources. The study of a Norwegian auction for Atlantic cod shows that prices increase when two or more bidders participate in the auction. Holding other variables such as lot size, quality grade, and seasonality constant, price increases of 4.51 %, 6.47 %, 7.18 %, and 9.88 % in auctions with two, three, four, and five plus bidders were found, compared to auctions with only one bidder. The increasing prices following from higher bidder numbers also indicate that fishers should be incentivized to provide high-quality fish at the right time of importance for optimal resource use. Increased competition also means that, over time, winning bids will be placed by the buyers that are the most capable of adding value and earning profits, which also contributes to optimal resource use. Findings also show to what extent factors such as lot size, quality grade, fishing method (bottom trawl, longline, Danish seine), and seasonality influence the probability of two or more participating bidders in auctions, which should be highly relevant information for fishers and policy makers.