Dengjun Zhang

SALMON AQUACULTURE: LARGER COMPANIES AND INCREASED PRODUCTION

Salmon farming is among the most successful aquaculture industries with a production growth that is substantially higher than aggregate aquaculture production in recent decades. It is well known that innovations and productivity growth are the main sources for this development. In this article we look closer at two potentially important factors in production growth, development of farm size and company size directly through economies of scale and indirectly through capacity in R&D, innovation, sales and marketing. In Norway, production per license has increased from 26 tons in 1980 to 1,130 tons in 2010, suggesting a substantial intensification in the industry. In all five leading salmon producing countries, the degree of concentration has increased and the large firms have become bigger over time.

PRICE TRANSMISSION IN NEW SUPPLY CHAINS—THE CASE OF SALMON IN FRANCE

In recent years there has been increased interest in the transaction forms in salmon markets, given that contracts have become more common, vertical mergers create firms that cover several levels in the supply chain, and futures markets have developed as a price risk tool. These are strong indications that salmon supply chains are developing in the same direction as supply chains for more processed food products. In this article we investigate to what extent this development has influenced the price transmission process for two product forms: a relatively unprocessed one (fresh fillets) and a more processed one (smoked salmon). Results indicate that the supply chain for fresh fillets can still be characterized by a high degree of price transmission. On the contrary, the hypothesis of full price transmission for smoked salmon is rejected.

Testing Structural Changes in the U.S. Whitefish Import Market: An Inverse Demand System Approach

The seafood market has changed substantially in recent decades, becoming increasingly globalized. This has led to introduction of new species and new sources of fish in most markets. We estimate a seafood demand system that, unlike models in previous studies, accounts for potential structural shifts caused by these market changes. We investigate the impact of tilapia as a new species and China as a new source on demand for imported whitefish in the United States. The results indicate that price flexibilities change substantially over time and that the structural shift takes place over a prolonged period.

CHINA'S IMPACT ON GLOBAL SEAFOOD MARKETS

In this article we attempt to evaluate Chinas impact on global seafood trade. The estimated export similarity and relative price indices indicate structural change in the observed global seafood trade patterns. Accordingly, the inverse Almost Ideal Demand System model with a transition function is applied. The estimated demand flexibility indicates a rising substitutability between seafood products from China and other developing countries. By contrast, Chinas expansion has a less negative influence on the prices of seafood products from developed countries.

The oil price shocks and Nordic stock markets

We investigate the influence of the crude oil price on the Nordic stock markets (i.e., Norway, Sweden, Denmark and Finland). The estimated cointegration vectors indicate that the oil price has a positive influence on each of the four markets, with the strongest effect on Norway, the only oil–exporting country in this region. The findings support the hypothesis of a positive relationship between stock prices and a rising oil price, which is mainly driven by the aggregate global demand. Variance decomposition statistics further reveal the differences between the responses of Norway and the responses of the three other countries to supply and demand shocks in the crude oil market.

Profitability in Norwegian salmon farming: The impact of firm size and price variability

ABSTRACT In this paper, we investigate the impact of firm size and price variability on firm profitability in the Norwegian salmon farming industry using a panel data set of all companies from the period 2000 to 2014. Several proxies for firm size are included in the analysis. We find that firm’s share of total sales has a positive impact on profitability, while an alternative proxy, total assets, is negatively linked to profitability. Financial leverage (gearing) has a negative impact, but liquidity (current assets/current liabilities) is not found to significantly affect profitability. Operating efficiency indicators like working capital management (net working capital/total assets) and operating leverage (fixed assets/total assets) are positively associated with profitability. Finally, we find that salmon price variability increases profitability, and that smaller companies are more able to take advantage of the profit opportunities that price variability offer, compared to larger companies.

The role of price risk in China’s agricultural and fisheries exports to the US

ABSTRACT This article explores the effect of price risk on the US importers’ optimal allocation of agriculture imports between the major supplier, China, and other competing countries. We first modify a demand system to account for the impacts of own-price risk and cross-price risk, and then apply the model to 16 agricultural and fisheries commodities exported to the US. The estimation results show that importers are sensitive to price risks of 14 Chinese commodities. Comparisons between price risk–trade relations of agricultural and fisheries products and between trade effects of cross-price risk on Chinese goods and substitutes provide strong evidence for explaining the observed trade patterns. Our study highlights the importance of price stability in promoting international trade, especially from developing countries to developed countries.

How exchange rate affects Chinese processing trade? The case of ground fish

As imports destined for primary processing and then exporting occur across industries, in this study we developed a structural model to examine how exchange rate affects the exports of processed ground fish from China. The home demand for processed goods is incorporated into the model in accordance with the fact that the share of processed goods remaining in China tends to increase over time. China is the worlds largest import-processing centre of ground fish. The fact that China produces almost no ground fish facilitates identifying the trade data. For exports with both foreign and domestic origins, the data issue is a big challenge for empirical studies. The simulated results indicate that a 7% appreciation of the Chinese currency would raise the export price of processed ground fish by 4.06%, corresponding to a share of 40% foreign content in the processed product. In addition, the increased share of home consumption would enlarge the responses of exports to changes in the exchange rate.

Investment and revenue cap under incentive regulation: The case study of the Norwegian electricity distributors

Abstract Electricity distribution operators are regulated as monopolies around the world. Incentive regulation is further applied to relate their allowed revenues (revenue cap) to cost efficiency and investment. Incentive regulation varies cross countries and has evolved over time for individual countries. Norway is one of the first countries reforming the network distributors by incentive regulation. Using the long time series data, we evaluated the impact of the Norwegian regulation regimes on firms’ investment. The panel data model includes common time-varying factors to control firm heterogeneity. The cross-section dependence test is further employed to test the relationship between investment and revenue cap in different regulation regimes. The empirical findings confirm a dynamic pattern of investment behavior between regimes, in terms of both the unobserved common factors and the cross-section dependence between investment and revenue cap. This study provides an interesting solution for incentive evaluation and contributes to the management accounting literature in terms of econometric techniques.

Trade diversion and antidumping effectiveness: insights from a residual demand model

A residual demand model is developed to predict the likely effects of an antidumping duty in the presence of trade diversion. A key insight is that the ability of an AD duty to increase the welfare of producers in the country imposing the duty hinges on the import supply elasticity for product from non-named sources. The only instance in which this is not true is when supply for product from the named source is perfectly elastic. In this case, the welfare gain to domestic producers is maximised irrespective of the supply elasticity for imports from non-named sources. A comparison of the residual demand model with the Armington model suggests the latter significantly understates both trade diversion and domestic producer gains from the duty.