Question

your discussion of catch shares using what you have learned about how monopolies make pricing and output decisions, and how and why market power is a problem, in addition to the feedback you received. Include any other negative aspects of catch shares that you find through your own research.

Now put yourself in the role of a social advocate. Noting the problems you presented above, what solutions do you have to help protect society? Offer an alternative solution that addresses the issues you noted in part I and avoids the problems you noted in the first half of part II. Be creative, you are not limited to possible government intervention but should also consider potential interventions from other groups in society.

Answer 1

Monopolies who are willing to exploit their market power always try to Maximize their profits using ulterior pricing and output decisions. For this, They try to Increase the price of the commodity or decrease their Output costs.

For the decrement of their output costs, there are many decisions they generally take like Reduction of product quality, reducing the labor employed, making late deliveries etc.

In the fisheries industry, the Catch shares once were the necessity due to the communal nature of the fishing industy. Fisheries were always considered common resource due to which the Catch shares came into being where an area was allocated to a particular entity to have exclusive right to catch the stock present in that area.

This led to exploitation of the privilege. Due to exclusive allocation, fishing companies started to follow certain malpractices like:

> Reduction of part time employment ( mostly paid in terms of no. of landings) in the favour of very less Full time employment(paid in wages) on the vessels so that capitalization can be reduced.

> Reduction of Number of vessels because maintenance of large fleet was a burden of capital resources and going in with a large fleet led to increment of this capital requirement.

Other Bad impacts can be a proliferation of only a specific group of people who influence the decision making in their favour through money and muscle.

The quality can be a big issue as even bad stock can reach the customer's plate.

There can be environmental impact if an area is used to catch single kind of fish which can potentially create an imbalance in marine ecosystem.

Apart from Govt. regulation, There can be creation of fishing unions where an area is provided to a group of people rather than individual companies. Credit availability for the new entrants into the industry, Fixing the minimum wage at high levels, financial help for fleet maximization, rotational basis of allotment, periodic quality checks.