The Fresh Fish Market - A Perfect Competition
Fresh fish. It is something that we're
accustomed to here in Malaysia. Fish in Malaysia is one of our staples for
protein, either cooked in our favorite sweet and sour sauce, steamed with
ginger and oyster sauce or made into otak-otak, it is something that always
seems to be around when we think of food.
However, if you try to look from an
economic point of view, the fresh fish market is one of the good example for oldest
perfect competitions in our love country. It is not only about a fish was
selling in market, but it is also being a part of the tradition and lifestyle
for almost fishermen who have the skills for catching fish and then passing
down for next generations.
Being in a perfect competition, there is
a very large amount of fishmongers in Malaysia, and all of them are selling the
same thing, fish
.
The fresh fish market is a very open
market, as long as you have the fish to sell, you're set. All you have to do is
rent a stall at a local market and you can start running your business.
However, the value of pricing is very important when you're selling a fresh
fish.
The sellers must do some observation and analyze the currency value of
price in the market price as they are act as price takers and have no
market power, so if you put the value of price selling overcharge for your
fish, you'll probably run out of business very soon because the buyer have the
information what the currently market price of fish. They have the choice to
buy the fish freely and choose the most affordable price.
Now, let's together try to understand economic language regarding this topic. How economist see this matter?
Now, let's together try to understand economic language regarding this topic. How economist see this matter?
Perfect competition was defined as the opposite of a monopoly, in which only a single firm supplies a particular good or service, and that firm can charge whatever price it wants because consumers have no alternatives and it is difficult for would-be competitors to enter the marketplace.
Under perfect competition, there are many buyers and sellers, and prices reflect supply and demand. Also, consumers have many substitutes if the good or service they wish to buy becomes too expensive or its quality begins to fall short. New firms can easily enter the market, generating additional competition. Companies earn just enough profit to stay in business and no more, because if they were to earn excess profits, other companies would enter the market and drive profits back down to the bare minimum.
Now, get back to the topic. Supplier of fish is not something you
need to worry about, because after all, the sea is always there, so there will
always have the fish, right?
Well,
when you think about it like that,
actually many factors can affect the supply in the fresh fish market.
For
example, the weather. During the heavy rain season in Malaysia, supplier of
fish is heavily reduced, as fishermen cannot go out to sea to catch the fish.
At that point, the demand would surpass the supply, and the price of fish would
increase. This will result in a shortage of fish in Malaysia.
Another example is Chinese New Year.
This year during the festivities, the supply of fresh fish was drastically
deducted at wet markets in the cities as the majority of Chinese wholesalers
were celebrates on their Chinese New Year Holiday. Tenggiri fish were being
sold between RM26 and RM27 per kilogram , Sardines between RM5-RM9, Tuna fish
between RM6-RM7 and prawns between RM19-RM26 per kg depending on size. These
prices are RM1-RM1.50 above from their market equilibrium prices, but people
still bought them because of the demand still exist.
The
laws of demand and supply dictates that when prices increase, demand will
decrease. But in this case, demand did not decrease. This is because, being a
festive season, this was a special case. During Chinese New Year, Chinese families have family dinners and banquets where fish is usually served, and
during that time of celebration, they omitted the increment in the prices for
fish. This goes to show that many factors are able to influence a perfect
competition and we can't just follow the generic rules of demand and supply
when we analyze the market.
Producers
in the fresh fish market earn normal profit. At this point, the fresh fish
sellers are putting all their resources to the best use, working at full
efficiency. The overall goal of the fishmongers is to maximize their
economic profit while minimizing their costs.
Written by Cheryl Chai Hui Yih (0314945)
Edited by Nurul Syafiqah bt Mohd Nasir
References:
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