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Causality in demand: A co-integrated demand system for trout in Germany

[journal article]

Nielsen, Max; Jensen, Frank; Setälä, Jari; Virtanen, Jarno Juhani

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-242368

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Abstract This paper focuses on causality in demand. A methodology where causality is imposed and tested within an empirical co-integrated demand model, not pre-specified, is suggested. The methodology allows different causality of different products within the same demand system. The methodology is applied to fish demand. On the German market for farmed trout and substitutes, it is found that supply sources, i.e. aquaculture and fishery, are not the only determinant of causality. Storing, tightness of management and aggregation level of integrated markets might also be important. The methodological implication is that more explicit focus on causality in demand analyses provides improved information. The results suggest that frozen trout forms part of a large European whitefish market, where prices of fresh trout are formed on a relatively separate market. Redfish is a substitute on both markets. The policy implication is that increased production of trout causes a downward pressure on fresh trout prices, but frozen trout prices remain relatively unaffected.
Classification National Economy; Economic Sectors
Document language English
Publication Year 2009
Page/Pages p. 797-809
Journal Applied Economics, 43 (2009) 7
DOI http://dx.doi.org/10.1080/00036840802600038
ISSN 1466-4283
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)