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When Anti-Dumping Measures Lead to Increased Market Power: A Case Study of the European Salmon Market

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  • Asche, Frank
  • Steen, Frode

Abstract

In this paper we apply the Bresnahan-Lau (1982) model to test for market power in the European distribution of salmon. In this particular setting, the model also incorporates a test of whether dumping takes place over time. Utilising data at the import level, derived demand equations are specified rather then consumer demand. From 1997 a so-called salmon agreement that implied minimum prices, a growth ceiling and a feeding restriction program for Norwegian farmers was imposed. Here we test whether the agreement resulted in an increase in the Norwegian market power. The results suggest that Norway did not have market power prior to the salmon agreement, and we find no indication that dumping was taking place. However, the agreement led to Norwegian market power after 1997. It is interesting to note that the agreement was initiated to prevent anti dumping duty of 13% that Norwegian farmers would have to pay otherwise. The increase in mark-up from imposing the agreement is found to be in the order of 14-15%, suggesting that the Norwegian farmers saved a fee of 13% and gained a markup that was even higher.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5781.

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Date of creation: Aug 2006
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Handle: RePEc:cpr:ceprdp:5781

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Keywords: anti-dumping; market power; salmon markets;

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References

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  1. Thomas J. Prusa, 1997. "The Trade Effects of U.S. Antidumping Actions," NBER Chapters, in: The Effects of U.S. Trade Protection and Promotion Policies, pages 191-214 National Bureau of Economic Research, Inc.
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  3. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
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  6. Guttormsen, Atle G., 2002. "Input Factor Substitutability In Salmon Aquaculture," Marine Resource Economics, Marine Resources Foundation, vol. 17(2).
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  9. Mary K. Muth & Michael K. Wohlgenant, 1999. "A Test for Market Power Using Marginal Input and Output Prices With Application to the U.S. Beef Processing Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 638-643.
  10. Bernstein, Jeffrey I, 1994. "Exports, Margins and Productivity Growth: With an Application to the Canadian Softwood Lumber Industry," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 291-301, May.
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  12. Asche, Frank, 1997. "Trade Disputes And Productivity Gains: The Curse Of Farmed Salmon Production?," Marine Resource Economics, Marine Resources Foundation, vol. 12(1).
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  14. Gruben, William C. & McComb, Robert P., 2003. "Privatization, competition, and supercompetition in the Mexican commercial banking system," Journal of Banking & Finance, Elsevier, vol. 27(2), pages 229-249, February.
  15. Asche, F., 1998. "Testing the Effect of an Anti-Dumping Duty: the US Salmon Market," Papers 26/98, Norwegian School of Economics and Business Administration-.
  16. Rosenbaum, David I. & Sukharomana, Supachat, 2001. "Oligopolistic pricing over the deterministic market demand cycle: some evidence from the US Portland cement industry," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 863-884, May.
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Cited by:
  1. Haldrup, Niels & Møllgaard, Peter & Nielsen, Claus Kastberg, 2005. "Sequential versus simultaneous market," Working Papers 02-2005, Copenhagen Business School, Department of Economics.
  2. Xie, Jinghua & Kinnucan, Henry W. & Myrland, Oystein, 2008. "The Effects of Exchange Rates on Export Prices of Farmed Salmon," Marine Resource Economics, Marine Resources Foundation, vol. 23(4).

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