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Ice to Meet You

March 31, 2010

An investigation into the packing and selling of seafood products has found that “large amounts of ice” are “included in the price.” In some cases “ice accounted for up to 40 percent of the product’s weight.” Not surprisingly, adding weight to the seafood drives up the prices. For example, consumers purchasing Wild American Shrimp can expect to overpay by $9.66.

This type of control fraud has set up a Gresham’s dynamic. Gresham’s law states that “bad money drives out good.” In this case, “bad” companies that increase the weight of their seafood products take advantage of their information asymmetry over consumers to drive out from the market “good” companies that do not increase the weight of their seafood products. The investigation “found a ‘significant market share’ of packers were not following the law, either knowingly or because they didn’t realize that they weren’t supposed to include the weight of the ice glazing.”

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