The purpose of this paper is to provide an economic analysis of the sources of supply to the US shrimp market.
The paper uses monthly time series data to estimate a simultaneous equations model with equations for domestic supplies from the Gulf of Mexico, imports, and prices.
Estimated long-run elasticities suggest that the domestic shrimp supply appears to be explained by seasons, diesel fuel price, hurricane activity, and shrimp price. The authors find evidence of a downward-slopping supply curve for the domestic harvesters that is likely to be temporary. Furthermore, anti-dumping duties have been ineffectual in curtailing imports produced by exploitation of natural shrimp biomass in developing countries and by technological advancements in aquaculture production. The authors also find evidence of a low exchange rate pass through. Finally, while domestic and import prices are not cointegrated, there is a two-way causality between them.
The authors found evidence that shrimp prices have fallen as import supply, due to technological advances in aquaculture, has risen faster than the US domestic demand over time suggesting a downward sloping supply curve. Also, the falling value of the US dollar has discouraged the imports, while the anti-dumping duties appear to have had little influence on the aggregate level of imports.
It provides a thorough investigation of the supply side of an important component of the US seafood market displaying the complexity of domestic producers’ reaction to falling prices, and ineffectual protectionism.
