Jinghua Xie

The Effects of Exchange Rates on Export Prices of Farmed Salmon

The CBS inverse demand system is extended to include exchange rates. Applying the extended model to trade data for farmed salmon, results suggest export prices are at least as sensitive to changes in exchange rates as to changes in trade volume. Exchange rate pass-through (absorption into export prices) is complete for the Chilean peso and the British pound, but incomplete for the Norwegian kroner and the US dollar. This suggests producers in Chile and the United Kingdom (UK) are more affected by short-term movements in relative currency values than are producers in Norway and Rest of World (ROW). Model simulations suggest currency realignments, especially the depreciation of the Chilean peso, contributed to the 2003-04 collapse in world salmon prices.

Consistent Aggregation in Fish Demand: A Study of French Salmon Demand

Abstract Product aggregation levels in the seafood demand literature are normally selected based on the research objectives rather than on empirical tests. This study applies the Generalized Composite Commodity Theorem (GCCT) developed by Lewbel (1996), to test the aggregation of French household demand of salmon. The results indicate that demand for salmon can be aggregated based on product form (i.e., fresh, frozen, and smoked salmon). These composites can be further aggregated into a single salmon category. Salmon demand can, therefore, be estimated using a system which only includes salmon equations. The composite demand elasticities estimated by the AIDS model suggest that fresh and smoked salmon significantly substitute each other in the French salmon market. This means that the estimation of an import demand system that does not include smoked salmon cannot really explain real consumer demand. The results also suggest that wild salmon is playing in a different market niche than farmed salmon. JEL Classification Codes: Q13, M30, F10

Modeling market structure of the Spanish salted fish market

Abstract The Spanish market for salted fish products has been restructured over the last decade. A significant pattern is a steady increase in the consumption of frozen light salted fillets at the expense of traditional products. This study is to model the Spanish demand for salted fish using the Almost Ideal Demand System (AIDS). Our findings suggest that a significant trend exists that consumers in Spain prefer to purchase the new light salted cod fillets to traditional salted cod in general. The cross price elasticity of Norwegian salted whole cod with respect to frozen light salted fillets is significantly positive. This suggests that the light salted fillets are a strong substitute for Norwegian salted whole cod. Strong substitution effects also exist between the salted whole cod from Norway, Iceland, and the Faroe Islands. Since Norway has the dominant share of exports of traditional salted whole cod, the results overall indicate a strong challenge for the Norwegian salted fish industry to maintain its position in the Spanish market.

Testing Advertising-Induced Rotation of Demand Curves in the EU Salmon Market

The Almost Ideal Demand System (AIDS) is estimated to examine the responses for salmon promotion conducted by the Norwegian Seafood Council (NSC) in the EU Atlantic salmon market. The model allows advertising to shift and rotate the demand curve simultaneously. EU demand is segmented by supply sources of the salmon, namely Norway, the United Kingdom, Chile, Canada, and the Rest of World. Results suggest that a 10% increase in advertising expenditure sponsored by the NSC makes the demand curve of Norwegian salmon and Canadian salmon rotate counterclockwise by 0.54% and 10.3%, respectively, and the curve for the Rest-of-World salmon rotate clockwise by 4.09%. In our empirical case of salmon demand, the impact of advertising-induced rotation on the optimal spending level and the change in producer surplus is significant when the advertising expenditure is greatly intensified, the export volume is huge and the supply is less elastic.

Market Power of the Icelandic Salted Fish Industry in Spanish Markets

Iceland and Norway are two main salted fish exporters to Spain. An evident result is that the Icelandic industry benefits from a growing Spanish salted fish market at the cost of the Norwegian industry. The market-oriented innovation of Icelandic industry mainly explains its success against production-oriented Norwegian industry. I argue in this chapter that Icelandic innovation is co-developing with the market power of the Icelandic industry, which makes the Norwegian problem even worse. The chapter tests the existence of Icelandic market power in Spain by using descriptive data analysis and econometric modeling. The sources of Icelandic market power were stated to be friendly Icelandic institutional environments, the industry’s market-oriented innovations, and the control power of the Icelandic salted fish industry in the vertical integrated salted fish value chain.

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.

Challenges of the Norwegian Salted Fish Industry in the Spanish Market

The Spanish market for salted fish products has been restructured over the last decade. A significant pattern is a steady increase in the consumption of frozen light salted fillets at the expense of traditional products. The three Nordic countries, (i.e., Norway, Iceland and the Faroe Islands) account for around 90 % of the Spanish market share. Among them, the share of Iceland is expanding, due to the substantial growth of light salted fillet export. The share of Faroe Islands slightly increases due to its success in clipfish fillet exporting in consumer packages. However, the Norwegian export suffers a major loss, which is mainly explained by its conventional commitment of export of wet salted cod. Overall, the results indicate a significant challenge for the Norwegian salt fish industry to maintain its position in the Spanish market. A market-oriented strategy of differentiating and developing new products is suggested to improve the Norwegian industry’s performance in Spain.

Decision Process for Adoption of Innovative Products in the European Seafood Market: The Importance of Supply and Demand Factors

This study proposes a new approach with two-dimensional point of view to test predicting factors that are influencing European trader decisions for the adoption of innovative seafood products in the distributor channels. A combination of two main predicting factors for adoption is investigated in the “supply factors” (4Ps: product, promotion, place, and price) and the “five innovation demand factors” (5IDs: relative advantage, compatibility, complexity, trialability, and observability). The findings indicate that 4Ps and 5IDs have a significant effect as controlling variables in the decision-making process for innovation adoption. This fact shows a strategic function and illustrates that supply–demand factors have a pressure effect on the innovation adoption process in the market. The results are important both for satisfying consumer expectations and for industrial innovation strategies.