In 2002, the U. S. Fish and Wildlife Service proposed banning imports of beluga caviar to protect the beluga sturgeon in the Caspian and Black seas, whose sturgeon population had fallen 90% in the last two decades. The United States imports 60% of the world's beluga caviar. On the world's legal wholesale market, a kilogram of caviar costs an average of $500, and about $100 million worth is sold per year. What effect would the U. S. ban have on world prices and quantities? (In 2005, the services decided not to ban imports.)

Question

Paisley Conley

Business

25 February, 03:00

In 2002, the U. S. Fish and Wildlife Service proposed banning imports of beluga caviar to protect the beluga sturgeon in the Caspian and Black seas, whose sturgeon population had fallen 90% in the last two decades. The United States imports 60% of the world's beluga caviar. On the world's legal wholesale market, a kilogram of caviar costs an average of $500, and about $100 million worth is sold per year. What effect would the U. S. ban have on world prices and quantities? (In 2005, the services decided not to ban imports.)

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Chaim Turner · Answer 1

Assuming the policy is effective the US exits of the beluga caviar market will make the prices and quantities decrease by a huge margin.

Also, we should consider that people will try to fullfil the demand of the beluga caviar thus, other types prices and quantities will increase. Also, there is the posibilities for a black market of beluga caviar or arbitrage is created (importing frozzen dished made with the beluga caviar) to walk-by the government regulation which will put the price way above the current price as it is illegal.