Asymmetric Price Transmission: A Case Study of the French Hake Value Chain

Asymmetry in price transmission has recently attracted much attention in the food literature, but hitherto this important issue has been overlooked in fish and fish product market studies. This paper seeks to fill this gap, and thus takes the fisheries market literature closer to the general food literature. To this end, an asymmetric error correction price transmission model has been estimated for the whole fresh French hake value chain. This paper tests for cointegration between auction and retail prices using the Engle and Granger two-step method, and the Enders and Granger Threshold Autoregression (TAR) and Momentum Autoregression (M-TAR) methodologies. The results present clear evidence of asymmetric price transmission in the whole hake value chain and that the assumption of symmetric adjustment in this sector produces misleading and biased results. The price response behaviour of retailers is found to be consistent with asymmetric price transmission: retailers immediately respond to positive changes in auction prices by adjusting their prices upward, but they do not react as quickly to falling auction prices. These findings have profound implications for studying margins along the value chain of fish and fish products. By ignoring the asymmetry in price transmission at different levels of the value chain, calculations of margins will be biased.asymmetry, value chain, price transmission, Threshold Autoregression (TAR), Momentum Autoregression (M-TAR), Resource /Energy Economics and Policy, Q22,

Measuring Oligopsony Power of UK Salmon Retailers

A significant increase of concentration in the UK salmon retail subsector has heightened concerns about retail firms’ ability to exercise market power in the purchase of supplies (oligopsony power). To assess the extent to which retail firms have exercised oligopsony power, we develop a dynamic error correction translog profit function to model the behaviour of retailers in the input market for smoke, fillet, and whole salmon. Initial estimates indicated violations of monotonicity and convexity conditions as implied by economic theory. In order to ameliorate the problem, a Bayesian technique was used to impose inequality restrictions to correct the anomaly. The final estimated indices of market power in the models were low and statistically significant but sufficiently closer to the perfect competition benchmark indicating that retailers as a whole behaved competitively during much of the period covered by this studySalmon, market power, error correction model, translog profit function, International Relations/Trade, Marketing, Research Methods/ Statistical Methods, JEL-I, JEL-J,

A Demand Analysis of the UK Canned Tuna Market

This study provides an analysis of the retail level demand for canned tuna in the UK using four-weekly scanned data for the period 1995–99. The role of product medium is analysed, looking at the interactions between the traditional tuna in brine and oil and the more recent value added tuna in sauces. A system of demand equations is estimated using the dynamic almost ideal demand system (AIDS) model. All products are demonstrated to have negative and inelastic own price elasticities. Tuna in brine and sauce is shown to be a normal good, while tuna in oil was demonstrated to be a luxury good. Tuna in oil was indicated as being a substitute for tuna in sauce., Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Marketing, Q21.,

Measuring Oligopsony Power of UK Salmon Retailers

A significant increase of concentration in the UK salmon retail subsector has heightened concerns about retail firms’ ability to exercise market power in the purchase of supplies (oligopsony power). To assess the extent to which retail firms have exercised oligopsony power, we develop a dynamic error correction translog profit function to model the behaviour of retailers in the input market for smoke, fillet and whole salmon. Initial estimates indicated violations of monotonicity and convexity conditions as implied by economic theory. In order to ameliorate the problem, a Bayesian technique was used to impose inequality restrictions to correct the anomaly. The final estimated indices of market power in the models were low and statistically significant but sufficiently closer to the perfect competition benchmark to indicate that retailers as a whole behaved competitively during much of the period covered by this study.Salmon, market power, error correction model, translog profit function, Food Security and Poverty, JEL-I, JEL-J,

Measuring Market Power in the UK Retail Salmon Industry

This paper presents an investigation into the market structure for three product types of salmon (smoked, fresh and whole salmon) in the UK retail market. Evidence of the potential for market power and pricing conduct is analysed using structural simultaneous system equations based on the Bresnahan (1982) model. The importance of the retail market is recognised given the dominance of supermarket chains which accounted for £1.6 billion sales of seafood and the share of about 87% of all seafood retail sales in 2004 as compared with only 16% in 1988. The results indicate that the system is well represented by the models and that the market is competitive for fresh fillets and whole salmon but retailers exert some market power for smoked salmon. The hypothesis that market power is the same for all three products in the study was rejected; further indicating that retailers may be exercising market power for smoked salmon.Market power, Error correction model, Dynamic demand systems, salmon, Marketing, JEL-1, JEL-J,