Abstract
The purpose of this study is to examine how the competitive advantage on international markets based on sustainable production is reflected in the pricing behavior of farmed fish, using Norwegian Atlantic salmon (Salmo salar) as an example. The salmon is widely consumed and highly traded due to the rapid development of aquaculture. Norway, which has been successful in regulating and innovating for sustainable aquaculture, accounts for more than half of world production. A model dealing with pass-through of exchange rates and tariff rates based on the exporter’s profit maximization was applied to 28 major countries importing from Norway, using yearly panel data for 2000–2016. Significant evidence of price discrimination was observed in Asian countries where Norway has a high market share, such as China, South Korea, Thailand, and Vietnam. This implies that the market structure of imperfect competition played a major role, suggesting the need to diversify imports to transform the market structure in favor of consumers in Asian countries. Research on the pricing behavior of fisheries products, including cultured fish, is limited in international trade. This paper addresses the gap by applying the pass-through model with changes in tariff rate as well as exchange rate.
Highlights
Global fish production amounted to 171 million tons in 2016, of which 47% was from aquaculture production [1]
Each applying nominal and real exchange rates. Both models adopted the panel-corrected standard errors (PCSE) linear regression method proposed by Beck and Katz [41]
This study analyzed the pricing behavior of Atlantic salmon from Norway, which has been successful in regulating and innovating for sustainable aquaculture, with competitive advantages in international trade. It has employed a model dealing with pass-through of exchange rate changes and tariff rate changes in international trade to find the evidence of the ability to price discriminate in the export of Norwegian fresh and chilled salmon
Summary
Global fish production amounted to 171 million tons in 2016, of which 47% was from aquaculture production [1]. The value of aquaculture products in the total market was USD 232 billion out of a total fish production value of USD 362 billion, far exceeding the economic value from capture fisheries [2]. The most-traded fish are mainly aquaculture species salmon, shrimp, and some bivalves. This is because aquaculture production can be controlled to a high degree, production quantities can be predicted, and vertical and horizontal integration can achieve economies of scale and logistics efficiency in the global market [2]
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