World Price Transmission for Differentiated Products: The Case of Shrimp in the US Market

Ly Nguyen and Henry Kinnucan

Marine Resource Economics, 2018, vol. 33, issue 4, 351 - 372

Abstract: The traditional approach to testing the law of one price is modified to allow for product differentiation. Applying the modified framework to the US market for shrimp, the pass-through elasticity of the import price into the domestic price was found to be less than one, as predicted by theory when domestic and imported versions of a good are imperfect substitutes. Among the supply and demand shifters included in the model, the most important variables to affect the domestic price are exchange rate and the price of diesel fuel. The pass-through elasticities for diesel fuel (0.38) and exchange rate (0.55) are almost as large as for import price (0.60). This suggests changes in exchange rates and fuel prices are not to be overlooked as important drivers of the domestic price. The US market for shrimp is highly efficient, with 70% of disequilibrium caused by a demand or supply shock “corrected” within one month.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://dx.doi.org/10.1086/699660 (application/pdf)
http://dx.doi.org/10.1086/699660 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:mresec:doi:10.1086/699660

Access Statistics for this article

More articles in Marine Resource Economics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().