Large buyers at a fish auction: The case of the Norwegian pelagic auction

Abstract

This paper explores the role of large buyers at the Norwegian pelagic auction. The auction is electronic, with no product inspections and conducted on a first-price, sealed-bid basis. Hedonic price modelling was applied to auction data for mackerel for the main seasons of 2013–2015, which comprise 2447 transactions accounting for a traded volume of 581,613 t. A key finding is that the largest buyers pay lower prices than smaller buyers, all else being equal. For example, holding transaction quantity and fish size constant, the largest buyer pay about 3% less than the small buyers, implying a discount of NOK49.9 million for the three years covered by the study. This is attributed to a better understanding of the auction, including other buyers’ valuations. In addition, only the largest buyers can handle the largest catches, so there is less competition and lower prices in this market segment. Another key finding is that, holding other factors constant, the largest buyers pay a lower price for fish size than that paid by small buyers. With transaction quantity held constant, the price discount for fish size is NOK 0.146 (per 10 g) for the largest buyer and the price premium for the small buyers is NOK 0.099 (per 10 g). Findings are discussed and compared with past research focusing on fish auctions. Practical implications are also discussed.