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The Way the Wind Blows : Tracing Out the Demand for Norwegian Lobster Using Instrumental Variables

Hammarlund, Cecilia LU ; Blomquist, Johan LU and Waldo, Staffan LU (2022) In Marine Resource Economics 37(3). p.263-282
Abstract

Knowledge of price formation in fisheries is important in understanding effects of fisheries regulations and the support or resistance to regulations from different stakeholders. This article studies how demand can be traced out using wind speed on a fishing trip. Wind speed is strongly correlated with the quantities of Norwegian lobster (Nephrops) available on the market. Using wind variables as instrumental variables and data on daily average prices and quantities over a 20-year period, we estimate the daily aggregate demand for two varieties of Nephrops.Wefind that the demand for both varieties is highly responsive to price changes and that own-price elasticities using the instrumental variable estimators are two to three times... (More)

Knowledge of price formation in fisheries is important in understanding effects of fisheries regulations and the support or resistance to regulations from different stakeholders. This article studies how demand can be traced out using wind speed on a fishing trip. Wind speed is strongly correlated with the quantities of Norwegian lobster (Nephrops) available on the market. Using wind variables as instrumental variables and data on daily average prices and quantities over a 20-year period, we estimate the daily aggregate demand for two varieties of Nephrops.Wefind that the demand for both varieties is highly responsive to price changes and that own-price elasticities using the instrumental variable estimators are two to three times higher than ordinary least squares (OLS) estimates suggest. In addition, cross-price elasticities show, in contrast to OLS results, that the two types of Nephrops are close substitutes.

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Please use this url to cite or link to this publication:
author
; and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Cross-price elasticities, demand estimation, fish markets, instrumental variables, own-price elasticities
in
Marine Resource Economics
volume
37
issue
3
pages
20 pages
publisher
University of Chicago Press
external identifiers
  • scopus:85133001890
ISSN
0738-1360
DOI
10.1086/719996
language
English
LU publication?
yes
id
8cbc0b98-170d-4752-8de9-2385c58b31b5
date added to LUP
2022-09-22 15:48:21
date last changed
2025-04-04 14:32:13
@article{8cbc0b98-170d-4752-8de9-2385c58b31b5,
  abstract     = {{<p>Knowledge of price formation in fisheries is important in understanding effects of fisheries regulations and the support or resistance to regulations from different stakeholders. This article studies how demand can be traced out using wind speed on a fishing trip. Wind speed is strongly correlated with the quantities of Norwegian lobster (Nephrops) available on the market. Using wind variables as instrumental variables and data on daily average prices and quantities over a 20-year period, we estimate the daily aggregate demand for two varieties of Nephrops.Wefind that the demand for both varieties is highly responsive to price changes and that own-price elasticities using the instrumental variable estimators are two to three times higher than ordinary least squares (OLS) estimates suggest. In addition, cross-price elasticities show, in contrast to OLS results, that the two types of Nephrops are close substitutes.</p>}},
  author       = {{Hammarlund, Cecilia and Blomquist, Johan and Waldo, Staffan}},
  issn         = {{0738-1360}},
  keywords     = {{Cross-price elasticities; demand estimation; fish markets; instrumental variables; own-price elasticities}},
  language     = {{eng}},
  month        = {{07}},
  number       = {{3}},
  pages        = {{263--282}},
  publisher    = {{University of Chicago Press}},
  series       = {{Marine Resource Economics}},
  title        = {{The Way the Wind Blows : Tracing Out the Demand for Norwegian Lobster Using Instrumental Variables}},
  url          = {{http://dx.doi.org/10.1086/719996}},
  doi          = {{10.1086/719996}},
  volume       = {{37}},
  year         = {{2022}},
}