EXVESSEL PRICE DETERMINATION IN THE ALASKA KING-CRAB FISHERY - A FORMULA PRICE CONTRACT UNDER UNCERTAINTY

Commercial fisheries industry structure often suggests exvessel price formation occurs in the context of a competitive harvesting sector and an oligopsonistic processing sector. However, industry conduct leadin g to a determination of exvessel price can be notably at odds with thi s inference. This paper presents empirical evidence that the conduct o f at least one such fishery, the Alaska king crab industry, may emulat e bilateral monopoly. Exvessel price determination is consistent with an implicit formula price contract in which fishers behave as monopoli sts through bargaining associations, while processors behave as counte rvailing monopsonists, even in the absence of explicit collusion. Both sectors appear to behave in a manner consistent with joint expected p rofit maximization, with profit shares apportioned via the implicit fo rmula price contract. This price formation process simplifies empirica l analysis of the bilateral monopoly conduct by avoiding complicated g ame theoretic/bargaining models. (C) 1995 Academic Press, Inc.