When anti-dumping measures lead to increased market power : a case study of the European salmon market
Working paper
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Date
2003-12Metadata
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- Discussion papers (SAM) [663]
Abstract
In this paper we apply the Bresnahan-Lau (1982) model to test for market power in the
European distribution of salmon. Utilising data at the import level, derived demand equations
are specified rather then consumer demand. Earlier studies using this approach (Steen and
Salvanes, 1999) found some evidence of market power. 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 apply a newer dataset to test whether the
agreement resulted in an increase in the Norwegian market power. The results suggest that
Norway regained market power and even increased it due to this salmon agreement. 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. This increase in market power is not
welfare improving to the EU consumers and should therefore be traded off against the benefit of protecting EU salmon producers.
Publisher
Norwegian School of Economics and Business Administration. Department of EconomicsSeries
Discussion paper2003:27