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Disease Risk and Market Structure in Salmon Aquaculture

Author

Listed:
  • Carolyn Fischer

    (Resources for the Future, 1616 P Street NW. Washington, DC 20036, USA)

  • Atle G. Guttormsen

    (#x2020;School of Economics and Business, Norwegian University of Life Sciences, Box 5003, 1430 Ås, Norway)

  • Martin D. Smith

    () (#x2021;Nicholas School of the Environment and Department of Economics, Duke University, Box 90328, Durham, NC 27708, USA)

Abstract

We develop a model of a multi-national firm producing commodities for a global market in multiple locations with location-specific risks and different regulatory standards. Salmon aquaculture and disease outbreaks provide an empirically relevant example. We specifically examine details of the infectious salmon anemia outbreak in Chile in the late 2000s, the multi-national nature of some firms operating in Chile, and the overall market structure of the salmon farming industry as motivation for our theoretical model. In the model, market structure and the regulatory environments in multiple countries interact to influence how intensively firms use aquatic ecosystems. Downward-sloping market demand can lead to a perverse outcome in which high environmental standards in one country both lower the provision of disease management in the other country and reduce industry-wide output. We extend this model to consider additional locations, types of firms, and within-location risk spillovers. We find that the risk of outbreak in a given location is decreasing with greater firm concentration within the location, increasing with the outside production of operators within the location, and increasing with lower risk (or more regulation) in other locations where the operators produce. We suggest other applications of multi-national risk management.

Suggested Citation

  • Carolyn Fischer & Atle G. Guttormsen & Martin D. Smith, 2017. "Disease Risk and Market Structure in Salmon Aquaculture," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-29, April.
  • Handle: RePEc:wsi:wepxxx:v:03:y:2017:i:02:n:s2382624x16500156
    DOI: 10.1142/S2382624X16500156
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    References listed on IDEAS

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    Cited by:

    1. Bong-Tae Kim, 2018. "Pricing Behavior for Sustainably Farmed Fish in International Trade: The Case of Norwegian Atlantic Salmon ( Salmo salar )," Sustainability, MDPI, Open Access Journal, vol. 10(12), pages 1-1, December.
    2. Mary F. Evans & Scott M. Gilpatric & Jay P. Shimshack, 2018. "Enforcement Spillovers: Lessons from Strategic Interactions in Regulation and Product Markets," Journal of Law and Economics, University of Chicago Press, vol. 61(4), pages 739-769.
    3. Asche, Frank & Smith, Martin D., 2018. "Viewpoint: Induced Innovation in Fisheries and Aquaculture," Food Policy, Elsevier, vol. 76(C), pages 1-7.

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