Quality-based pricing in a fish auction market: Are sellers’ expectations met?

Abstract This study investigates producer motivations for quality-enhancing production by comparing hedonic models for auctioned cod in Norway. Transaction prices reflecting buyer valuations of specific quality attributes are compared with sellers’ reserve prices reflecting their price expectations for the same attributes. High-quality attributes obtain the highest prices, but the spread between transaction and reserve prices for these attributes is negative, indicating that sellers’ price expectations are not met. However, the spread is positive for lower quality attributes, suggesting that keeping quality below the highest quality level represents the economically most sustainable way of harvesting.