INPUT FACTOR SUBSTITUTABILITY IN SALMON AQUACULTURE

Abstract

The salmon aquaculture industry has experienced substantial expansion during the last two decades. This expansion is largely the result of increased productivity, with a complementary decrease in costs. A general reduction in production costs has been accompanied by substantial shifts in the shares of inputs. Hence, one may question whether the technology has changed so much that some input factors are no longer substitutes in production. In this study, we investigate this by estimating a translog cost function focusing on the difference between full and partial static equilibrium specifications. The results from the different specifications provide evidence of limited or zero substitution possibilities in salmon production. This implies that salmon farming today can be thought of as a converter or refinement industry where less valuable fish (the feed) are converted into higher-valued product.Resource /Energy Economics and Policy,