Which of the four market structures, competitive market, monopolistic competition, oligopolistic competition, or monopoly, does an exporter exporting salmon from Tasmania to China likely face? Assume that he prefers shipping his goods by sea, and limit your answer to only the maritime industry

The answer is an oligopolistic competition.

• This is because of the following factors:
  • Tasmania, being part of Australia, has access to sufficient private capital to fund shipping costs to China by sea. However, it is unlikely that small producers will be able to ship on their own, given the barrier to entry, which is the high shipping costs.
  • In order for a shipment of salmon to be profitable, the industry must maximize the amount of salmon shipped to China, given that the shipping costs are fixed though expensive. Therefore, it is likely that the few major players that ship to China are those that can afford to arrange a supply chain (i.e., contract local fishermen) and ship large quantities to China in order for the operation to be economically viable. If every player tried to do this on their own (i.e., a competitive market), the operation would not be profitable for anyone. Therefore, having a few major companies (i.e., an oligopoly) gain economies of scale would make the operation more feasible financially.