Price linkages in Pacific tuna markets: implications for the South Pacific Tuna Treaty and the Western and Central Pacific region

A revenue-sharing arrangement is under consideration between the USA and Western and Central Pacific Island Parties. When the ex-vessel price for cannery-grade skipjack tuna is above a minimum price, Pacific Island Parties would share in the increased revenue. This arrangement would provide economic incentives to these island nations to control fishing capacity and thereby increase revenues and economic rents. This potential arrangement raises the issue of which market and species prices to use as a benchmark, Bangkok or Pago-Pago; American Samoa and skipjack or yellowfin tuna. This paper, through a time series analysis of spatial price linkages, finds price leadership for skipjack in Bangkok. Macroeconomic and regional economic implications of enhanced price stability and higher revenues in the region are also discussed.