Uncertainty About Consumption and Consumer Uncertainty

Abstract

Uncertainty in the context of demand for fisheries products suggests two quite distinct issues. The first is the uncertainty that resource managers face in predicting demand; the second is the uncertainty which faces consumers of fishery products. This paper argues that the first either (a) is of little importance relative to other prediction problems of fishery managers or (b) provides no new problems of analysis. However, the second issue relates to the demand for quality, a topic receiving much attention in the recent economic literature and one which has particular significance for the demand for seafood. When producers in a competitive industry have control over quality but consumers cannot perceive quality upon inspection, welfare gains can be made from imposing minimum quality standards. In addition, publicly supplied and accurate information about quality would have returns to both parties when consumers, uncertain about the health risks related to fish consumption, exhibit risk-averse behavior.