Informal pricing in formal fish markets: Evidence from the Solomon Islands

Abstract

How are fish prices determined in the largest formal market in the Solomon Islands? The Honiara Central Market is the country’s primary fresh produce market, serving as an important conduit between rural food producers and urban consumers. One distinctive characteristic of this market is that despite a diverse range of reef fish species being available, all reef fish are traded nominally as homogeneous goods with no price differentiation. Using transaction-level data collected from the market, we show the prevalence of informal pricing, wherein the unit price of fish is implicitly differentiated based on fish species groups, quality, and buyers’ attributes. This result aligns with our expectation that diverse species groups and qualities are traded in a competitive environment with many vendors and buyers, where reef fish are indeed traded as heterogeneous products. Although fish provide a vital source of food and income for Pacific Island countries, the pricing of this vital natural resource is poorly understood. Our study provides new insights into how fish prices are determined in a formal market within the context of small island developing states.