TY - JOUR
T1 - Price transmission in the trans-atlantic northern shrimp value chain
AU - Nielsen, Max
AU - Ankamah-Yeboah, Isaac
AU - Staahl, Lisa
AU - Nielsen, Rasmus
PY - 2018
Y1 - 2018
N2 - Recent research has found that markets for farmed shrimp and wild-caught northern shrimp in Europe are integrated, indicating that northern shrimp prices are affected by total supply and demand of shrimp. Thus, the continued growth of global aquaculture production and associated price decline affect northern shrimp fisheries. In this paper, price transmission in the trans-Atlantic northern shrimp value chain is analysed using a Vector Auto Regressive model in Error Correction form. Cointegration, the Law of One Price (LOP) and weak exogeneity are tested. The results reveal linkages from Greenlandic and Canadian exports, via Denmark to the final consumers in Denmark and United Kingdom. The LOP was rejected in all cases. Hence, price transmission exists, but it is imperfect. Peeled shrimp is further found to be subject to downstream market leadership, while impulse-response functions identify mixed responses, with downstream market leadership being the dominant characteristic. Growth in shrimp aquaculture, ceteris paribus, presses northern shrimp fishermen, the Greenlandic economy and local economies at Newfoundland through price reductions. As such, fisheries and their management must continuously improve efficiency to stay competitive.
AB - Recent research has found that markets for farmed shrimp and wild-caught northern shrimp in Europe are integrated, indicating that northern shrimp prices are affected by total supply and demand of shrimp. Thus, the continued growth of global aquaculture production and associated price decline affect northern shrimp fisheries. In this paper, price transmission in the trans-Atlantic northern shrimp value chain is analysed using a Vector Auto Regressive model in Error Correction form. Cointegration, the Law of One Price (LOP) and weak exogeneity are tested. The results reveal linkages from Greenlandic and Canadian exports, via Denmark to the final consumers in Denmark and United Kingdom. The LOP was rejected in all cases. Hence, price transmission exists, but it is imperfect. Peeled shrimp is further found to be subject to downstream market leadership, while impulse-response functions identify mixed responses, with downstream market leadership being the dominant characteristic. Growth in shrimp aquaculture, ceteris paribus, presses northern shrimp fishermen, the Greenlandic economy and local economies at Newfoundland through price reductions. As such, fisheries and their management must continuously improve efficiency to stay competitive.
KW - Cointegration
KW - Impulse-response function
KW - Law of One Price
KW - Price transmission
KW - Weak exogeneity
U2 - 10.1016/j.marpol.2018.04.002
DO - 10.1016/j.marpol.2018.04.002
M3 - Journal article
AN - SCOPUS:85045187528
SN - 0308-597X
VL - 93
SP - 71
EP - 79
JO - Marine Policy
JF - Marine Policy
ER -