Essays on International Trade of Salmon and Wine

Abstract

This thesis deals with the trade of two products, salmon and wine, exported from and to Norway. The World has benefitted from innovations and productivity growth in the Norwegian salmon aquaculture industry, increasing the availability of salmon worldwide at more affordable prices. In the same way, Norway has benefitted from the global surge in wine production stemming from competition between ‘new’ and ’old’ wine-producing countries, resulting in more affordable and higher quality wines. Thus, export of a commodity, such as salmon, allows welfare-enhancing imports of another, such as wine. This trade encapsulates the workings of a small open economy like Norway’s. The topics covered in this thesis deal specifically with trade relationships. First, it deals with trade relationships between the Norwegian salmon exports, trout exports and the destination markets. Second, it deals with relationships between wine exporters in different wine-producing countries and wine importers in Norway. In particular, we focus on market links, through the interaction between prices in different levels of the international value chain, and links between agents, through the interaction between exporting firms and importing firms. The analyses of these relationships involve different methodological approaches, including descriptive statistics, regression, cointegration analysis and duration analysis. The results from the analyses show strong links between Norwegian export prices of salmon and the retail prices in key markets like France and UK. Moreover, the export prices tend to lead the retail prices, so the supply is key to understand changes in prices facing the final consumers. However, it also shows that price transmission from export prices diminishes with processing, as salmon increasingly is just one of several inputs in the final retail product. The findings also show that Atlantic salmon is the price leader of rainbow trout, with the export prices of the two species tightly integrated. In terms of agents in trade, the salmon exports show that larger firms appear to obtain no price bonuses in the export markets. This observation corresponds to earlier research showing larger exporters sell a larger share on contracts and long-term agreements. Many smaller exporters operate in the spot markets resulting in many single trades, that nevertheless can be surprisingly large in value. In the wine imports, we find that the duration of importer-exporter trade relationships decreases when an increasing number of importers compete for wine from a wine-producing country. However, the more valuable the wine becomes, the more importers and exporters seem to invest to maintain their trading partnership.