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The purpose of this paper is to analyze the peculiar properties and welfare effects of aquatic resources market demand, which Gorman has argued for a long time that the price of fish is determined by ...
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The purpose of this paper is to analyze the peculiar properties and welfare effects of aquatic resources market demand, which Gorman has argued for a long time that the price of fish is determined by its quantity and expenditure. In economic literature, such a fishery market demand is called the inverse demand. This paper examines the Gorman's proposition through the Wu-Hausman test, thus deciding whether it has a peculiar market demand or not. As an implication of fishery management, the paper examines the tools to measure welfare effects when a quota of catching restriction is imposed on a type of fish. The results of this paper can complement the existing studies on the aquatic resources market demand. Its contribution and results are summarized as the following. First, the fishery market demand has the peculiar characteristic of inverse demand as Gorman argued. Second, the market welfare analysis should be different by the peculiar demand structure and quantity-constrained compensating variation can be applied extending Hicks' notion. Third, the limitation of this paper is that it ignores the dynamic effects of stock increase by catching restrictions, thus raising consumers' welfare in the future. In addition, it ignores the supply side of welfare change.
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[Abstract]