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Abstract
The limited exemption from antitrust legislation enjoyed by the Israeli
agricultural sector enabled collective marketing of fish by aquaculture
producers. The cartel-like organization of fish marketing raised concerns
that fish growers exploited market power to the detriment of consumers and
total welfare. On the other hand, grower cooperation in marketing may
increase producers’ as well as total welfare if the marketing sector is
imperfectly competitive. We use a simulation approach to evaluate the costs
and benefits ensuing from cooperative selling in the aquaculture sector,
compared to alternative market structures. Results indicate that despite farreaching
cooperation, fish farmers did not behave like a cartel and marketed
quantities which were much closer to the competitive equilibrium than to an
outcome expected for a producer cartel. On the other hand, we demonstrate
important potential benefits from cooperation in the case of an imperfectly
competitive marketing sector – commonly observed for many agricultural
products. The Israeli aquaculture sector provides an example of the
importance of a limited antitrust exemption for the agricultural sector.