Price transmission in the trans-atlantic northern shrimp value chain

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 -