Does Market Failure Exist in the Swedish Oyster Industry? A Cost-Benefit Analysis

Abstract: This paper studies the socio-economic and private economic costs and benefits from farming Ostrea edulis in Sweden and aims at providing a foundation for policy-makers making decisions regarding the development of aquaculture in Sweden. Using Ostrea AB, Sweden's only oyster company close to industrialisation, as a model, a cost-benefit analysis is conducted, in order to examine whether market failure exists within the Swedish oyster industry due to socio-economic net benefits resulting from the production process being greater than private economic net benefits. Our findings show that market failure does exist; between 2006 and 2018, the discounted socio-economic net benefits exceed the discounted private economic net benefits. However, the sensitivity analysis performed, reveals that the results are sensitive to changes in the volumes produced and sold.