Archive | February 2017

Is 10000 Yen a reasonable price for a single piece of delicious otoro?

In January a bluefin tuna (maguro) sold for 74.2m yen (£517,000) at the auction  in Tsukiji market in Tokyo.

It was bought by the president of the Sushi Zanmai restaurant chain and he planned to sell the pieces for 25 times their normal price of 400 yen.

Apparently conservationists said the publicity surrounding the auction risked overshadowing the problem of overfishing. About 70% of Pacific bluefin are less than a year old when caught and 95% are caught before they reach three years old – a practice that damages the species’ ability to reproduce and the number of fish is estimated to have plummeted by 97% from its historic high. Thus tuna is an example of a common-access resource, which, when overfished, causes large negative externalities of production. It is very rivalrous.

Conservationists want a two-year moratorium on fishing to rescue the Pacific bluefin population. In December, 25 tuna-fishing nations plus the European Union agreed on the need for an urgent bluefin tuna recovery plan. However Japan, saying that catch reductions will place too big a burden on fishermen, has tended to resist drastic cuts in catch quotas.  The difficulties of agreeing upon quotas demonstrates the non-excludability of tuna fishing.

Some conservationists may be appalled at the price paid for the tuna, but I would argue that (i) the publicity helps to bring the problem to public awareness, and (ii) such high prices means that it is more likely that the optimum price for consumption of tuna will be reached. The person who is willing to pay Yen 10000 for a piece of sushi or sashimi is paying a price that more accurately reflects the marginal social cost of fishing tuna. And presumably, if  he/she willing to pay that much for a piece, it is giving Yen 10000 of marginal social benefit to him/her.