Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Bergen, Department of Economics

No 11/18: Norwegian export of farmed salmon − trade costs and market concentration

Frank Asche , Ivar Gaasland , Hans-Martin Straume () and Erling Vårdal ()
Additional contact information
Frank Asche: Institute for Sustainable Food Systems and School of Forestry Resources and Conservation, University
Ivar Gaasland: Department of Economics, BI Norwegian Business School
Hans-Martin Straume: * Department of Economics, BI Norwegian Business School
Erling Vårdal: University of Bergen, Department of Economics, Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway

Abstract: While variation in unit value most commonly has been associated with quality in the trade literature, observed differences in prices between markets might also be explained by variation in market concentration and the degree of competition. Using transaction data on Norwegian exports of salmon, we introduce a Herfindahl index as a measure of competition in a standard gravity model. We find that competition typically is weaker in small and distant markets that due to high trade costs are served by relatively few firms. We argue that the anti-competitive impact of trade costs may explain price differentiation between markets even for homogeneous products.

Keywords: Gravity; Trade costs; Market concentration; Salmon

JEL-codes: C13; F14; Q22

15 pages, December 3, 2018

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