A welfare analysis of Norway’s export promotion programme for whitefish

Abstract

Norway recently increased the effective levy used to fund its export promotion programme for whitefish by 21 per cent. Study results suggest the intensified programme is welfare increasing. The net social gain, defined as the difference between the increase in economic surplus associated with the increased advertising and the decrease in economic surplus associated with the increased effective levy, is estimated at between $20 million and $136 million per year, for a best-bet estimate $60 million. The associated benefit–cost ratio (BCR), defined as the ratio of the aforementioned changes in economic surplus, is estimated at between 11 and 71, for a best-bet estimate of 32. The BCR is invariant to the supply elasticity. The invariance property is useful as it implies that the BCR can be estimated using strictly demand-side information; there is no need to estimate the supply side of the market. The current levy of 0.75 per cent appears to be well below the levy that would maximise producer welfare.