Gloucester, Massachusetts has always been a fishing town. But maybe not so much anymore.
Because of environmental concerns, the federal government is thinking about heavily restricting or completely banning cod fishing in the Gulf of Maine, an area known for its cod. If the government chooses not to restrict the fishing, scientists predict that the cod supply will reduce by over 80% over the next year, reducing supply.
This in turn will most likely drive up prices of cod in the industry, as the Gulf of Maine is a very large supplier of cod fish.
In my biased opinion, this could be an opportunity for a very positive change; the demand could very easily switch to vegetarian products, freeing these fish from being consumed. But the more likely substitute good will be cod obtained from fish farms, where the cod are raised in inhumane environments, with very high levels of chemicals in their bloodstream. In many ways this could be considered an inferior good, as most people prefer to buy fish that are caught from the ocean. Other inferior goods that could act as substitutes could be other types of more inexpensive fish.
Another substitute good that may see an increase in demand could be vitamins, specifically vitamins with high levels of omega-3 fatty acids, vitamin b12, and vitamin b6. Cod is known to be a very rich source of these vitamins, helping promote cardiovascular health.
We shall have to watch and see if the government chooses to put this law into effect. If they choose not to, then the effects on price will merely be delayed, but they will occur as the supply of cod decreases.
source: http://www.cnn.com/2012/02/28/us/fishing-life-threatened/index.html?npt=NP1 (2/28)
This is a good analysis and I would not call it biased! It is a basic market failure argument. Due to the Tragedy of the Commons the supply is greater than the socially optimal amount of cod. This has driven down the market price. As a consequence, more environmentally-friendly substitute goods (farm-raised fish and alternative protein sources) experience artificially-reduced demand (and price). Since Coasian bargaining over fishing is too difficult for us all to do, enhanced fishing quotas can improve the market. The issue I have is how are the quotas determined? If all fishermen's catches are reduced, is this really best? Ideally, those whose catches are more valuable should have less restrictions.
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