Understanding market demand for common pool resources, such as fish, is important for
predicting consequences of sustainable resource management. This article studies how
demand functions can be traced out using appropriate supply shifters. We show that wind
speed on a fishing trip is strongly correlated with the quantities of Norwegian lobster
(Nephrops) available on the Swedish market.
Using wind variables as instrumental
variables and data on daily average prices and quantities over a 20 year period we estimate
the daily aggregate demand for two types of Nephrops. We find that the demand for both
types of Nephrops is highly responsive to price changes and that own-price elasticities are
two to three times higher than OLS- estimates suggest. In addition, cross-price elasticities
show, in contrast to OLS results, that the two types of Nephrops are close substitutes.