GAINS FROM DEREGULATION - AN EMPIRICAL-TEST FOR EFFICIENCY GAINS IN THE NORWEGIAN FISH FARMING INDUSTRY

A cost function is used to quantify potential sources of gains from de regulation of the Norwegian salmon farming industry, an industry that has been heavily regulated in order to achieve a regional dispersion o f production and profits along the entire coastline. It now seems to b e widely recognised that the regulations have led to cost inefficienci es. A region-augmented cost function with data from 282 fish farms for 1988 is used to estimate regional productivity differences, i.e. diff erences in the total cost of producing salmon in one region compared t o another. It is found that the potential gains from deregulation may be substantial.