Social Network Analysis of Price Dispersion in Fishing Quota Lease Markets

Abstract

ABSTRACT We present a novel technique for analyzing price dispersion in non-centralized quota lease markets where pairwise negotiations determine price and price information from past transactions is not generally available. The technique does not require fishing cost or ex-vessel price data and employs social network analysis metrics (namely degree centrality and constraint) to measure access to information and network position for buyers and sellers. Our method is applied to the Gulf of Mexico red snapper quota lease market and finds that certain quota lease traders with larger information-sharing networks or stronger network positions have greater negotiating power. Also, average quota lease prices varied by region even though there are no geographic trading restrictions. Results indicate social networks are correlated with price dispersion and inefficiencies in the trading markets that can undermine the success of catch share programs that seek to improve fishery profits and reduce overcapacity. JEL C...