South-Western EconNews

Urchin Searching

Subject

Comparative statics

Topic

Equilibrium

Key Words

Economy, tastes, exporters, prices, demand, supply

News Story

The livelihoods of many Maine fishermen are closely tied to the economy and tastes of the Japanese. They dive for sea urchins, which are then sold to exporters who sell them to Japan for sea-urchin roe, a delicacy in Japan. In the mid-1990s, when the Japanese economy was soaring and the Japanese sea urchin harvest was declining due to over-fishing, the bountiful supply of Maine sea urchins was tapped. Prices, which had once been 14 to 28 cents a pound, rose to $3.50 a pound at peak times. This enabled some fishermen to earn over $1,000 a day.

The industry attracted thousands of divers who saw a chance to get rich quickly. Entry was relatively cheap. Urchin divers needed only about $3,000 of equipment. Lobstermen, on the other hand, generally needed $70,000 for a boat and traps.

Nowadays, the Japanese economy is less buoyant and the sea urchin population is declining; there may only be a five-year supply left. As a result, the fishermen are looking for other delicacies to sell. Eels have been popular with the Japanese, prices soaring to $300 a pound as their demand outgrew the supply in Japan. However, Maine eel catches are down also, and prices have crashed to $25 a pound. Fishermen are now trying to interest the Japanese in sea cucumbers, periwinkles, and whelks, but without much success. They are loathe to go back to fishing for lobsters and scallops.

(Updated August 1, 2001)

Questions

1.	Draw a supply and demand diagram of the market for sea urchins in Japan. Show the equilibrium price and quantity. a) Illustrate the effect of a declining sea urchin population in Japan and the booming Japanese economy in the mid-1990s. What happened to the equilibrium price and quantity of sea urchins? b) When the Japanese imported sea urchins from Maine, what effect did it have on the equilibrium? Illustrate on your diagram. c) What happened when the Japanese economic boom ended? Show the effect on your diagram.
2.	Now draw the market for sea urchins in Maine. Again, show demand, supply, and the initial equilibrium. a) Show what happened to the equilibrium price and quantity when the Japanese started to import sea urchins from Maine. b) What was the effect of additional divers deciding to fish for urchins? Depict the impact on the equilibrium. c) What happened when the Japanese economy began to slow and the sea urchin catch in Maine became smaller? Illustrate.
3.	The Maine fishermen are reluctant to go back to fishing for lobsters and scallops. Consider the determinants of supply and conjecture why that might be, in view of the news story.

Source

Michael Caronna, "Maine's Fishermen Aim to Follow Urchin With Next Delicacy in Japan's Appetite," The Wall Street Journal, July 3, 2001.