Market Competition Fish
To what extent does the Shek Tong Tsui fish market illustrate perfect market competition
This essay analyses to what extent the fish market illustrates perfect competition. The results from the research of the prices paid by individual buyers at the Shek Tong Tsui fish market in Hong Kong. As assumptions, the fish market is a highly competitive market in which there should be no predictable price differences across customers who have equal price elasticities of demand.
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The results obtained from this investigation indicate that different buyers pay different prices for fish of identical quality. For example, some Asian buyers may pay less for fishes than white Caucasian buyers, a result which is inconsistent with the model of perfect competition. In reality, there is no industry that falls exactly in perfect competition but there are some industries that come close such as the fish market industry.
To economists, it may seem that when we have a large centralised market with informed buyers and sellers, there should be a very competitive market. However, fish is a highly differentiated product to sellers. There may be not enough information for buyers because they may look the same to them. Buyers will often wish to examine the fish themselves to check for quality or have their agents do so before purchasing.
The centralized market performs an important function in matching fish to buyers since every customer have very different price elasticities of demand. The buyers at the fish market will act as agents for consumers with different elasticities of demand, from restaurants in the housing district selling fish ball noodles, to expensive commercial high class restaurants selling their chef recommendations, to fry shops serving fish sandwiches, to suburban fish retail outlets. The high level of product differentiation in the fish market can lead to patterns of behavior that suggest a market that is close to perfect competition.
The stocks usually arrive at the market at dawn, freshly delivered from the wholesaler to the stall. The Shek Tong Tsui market opens up at 7:00am in the morning and closes at around 8:00pm.
Pricing at the Market
The quantity supplied of fish brought to the market is determined by many key factors. The weather is one of the most important determinants of supply since strong, powerful winds and high waves will make it difficult to catch fishes. The quantities may face downfall and prices may rise when there are storms.
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While quantities rise, the prices fall in good weather. Without centralisation, it may be unclear whether the price response could have been as effective for demand to match supply as buyers might have suspected gouging on the part of the sellers if prices were not easily comparable.
From observation, the prices of the fishes are usually at its highest during the early morning when the market opens this is because the fishes are at its freshest condition. While the prices of fishes are at its lowest during night time when the market is about to close because the seller wants to get rid of the fishes that are not fresh anymore. In addition, the stall keepers seem to price differently by nationality for example, they charge more on Caucasians then they charge on local people.
Primary research is conducted through observation of the market and secondary resources such as the news to see whether it affects the prices of the different stalls and also determining what market does the fish market lie on. Data will be collected during the summer. Observations may include daily prices and average daily prices of a few stall on a certain type fish on every one or two days for around one week.