The Vietnamese seafood industry has grown rapidly over the past few decades, largely rallying behind huge foreign demand. Institutions surrounding the production and processing of seafood for export have supported efforts to implement reliable regulations and eco-label certifications in line with demand for safe, environmentally friendly, and otherwise high quality products. No comparable efforts exist in the domestic market. Adverse selection is identified as the core problem with the lack of higher end goods on the domestic market, resulting from asymmetric information between producers and consumers, as well as moral hazard between actors in the supply chain. This study finds that consumers would be willing to pay a premium for credence attributes, or qualities which have values determined by consumer trust in information provided at point-of-purchase, for seafood products, but that they do not trust supermarkets enough to support such a higher end market. It is projected that in the coming years, as a middle class of concerned consumers eating more seafood enter the market, that there will be even bigger discrepancies between what is available relative to demand. It is suggested that in order to overcome adverse selection in the domestic seafood market, policy be implemented that provides additional support to farmer and fisher groups and that more stringently enforces standards that do exist for private and semi-private agents in the value chain. Overcoming the information asymmetries in the domestic market has not only the potential to improve market function and consumer wellbeing, but also to support medium-scale producers and beneficiaries of ecological public goods.
Agricultural and Resource Economics | Agricultural Economics | Food and Drug Law | Public Economics
Martin, Eliot, "The Challenge of Adverse Selection to Domestic Seafood Markets in Vietnam: Assessing Consumer Demand and Supply-Side Policy Options" (2016). Independent Study Project (ISP) Collection. 2340.