Review of Industrial Organization
13: 589–601, 1998.
1998 Kluwer Academic Publishers. Printed in the Netherlands.
Market Power, Industrial Organization and
, JULIA MENZO
and BONNIE MCCAY
Department of Agricultural Economics and Marketing, Rutgers University;
Department of Human Ecology, Rutgers University
Abstract. Individual Transferable Quotas (ITQs) were introduced into the Mid-Atlantic Surf Clam
and Ocean Quahog ﬁshery to reduce over-capitalization while conserving clam populations. Because
the number of operators in the ﬁshery declined drastically since the introduction of this policy, there is
concern about its effect on competitiveness. This paper utilizes Bertrand Pricing Models to show that
monopoly power is absent from the surf clam and ocean quahog markets. Concentration ratios, Lorenz
curves and Gini Coefﬁcients estimated for the ﬁshery for periods before and after ITQ introduction
support the results of the Bertrand model.
Key words: Bertrand pricing model, share concentration, market power, Gini coefﬁcients, ﬁsheries.
Because of problems associated with open-access ﬁshing, such as depletion of the
ﬁsh stock and loss of the resource rent, many social and other scientists, ﬁshery
managers, ﬁshing ﬁrm owners and members of the public alike share the view that
ﬁsheries must be regulated to some extent. From the late 1970s through 1989, the
Mid-Atlantic Surf Clam and Ocean Quahog (SCOQ) ﬁshery was regulated by a
number of different types and combinations of policies, including restrictions on
vessel entry, catch quotas and effort and gear restrictions.
These policies led to
an increasingly over-capitalized ﬁshery (Marvin, 1992; McCay and Creed, 1994;
Adesoji Adelaja is Associate Professor and Chair, Department of Agricultural Economics and
Marketing and Associate Director of the Ecopolicy Center; Julia Menzo is a Policy Research Analyst
in the Department of Agricultural Economics and Marketing; Bonnie McCay is Associate Director of
the Ecopolicy Center and Professor in the Department of Human Ecology. New Jersey Agricultural
Experiment Station Publication # D-02529-97-3. This research was supported by funds appropriated
under the Hatch and McIntire Stennis Acts and by a grant from the New Jersey Department of
Agriculture under the AERDI Program Implementation Project. The data base was made available
by the National Marine Fisheries Service.
Surf clams and ocean quahogs are both species of clams harvested in the Mid-Atlantic Surf
Clam and Ocean Quahog (SCOQ) ﬁshery which ranges from New England to Virginia. Before 1990,
the ﬁsheries were regulated differently in the sense that the ocean quahog ﬁshery only maintained an
annual catch quota and no effort or gear restrictions were imposed.