A simultaneous equations model of the U.S. market for Canadian Atlantic salmon

ABSTRACT. Most attempts to model markets for fish products have concentrated on the demand side of the market. Less work has been done on modelling the supply of fish products. A few simultaneous models exist, but these have incorporated supply considerations at a highly aggregated level, typically without distinguishing among species or product forms. In this paper, we develop a simultaneous equations model of both the supply of and demand for Canadian frozen cod products on the United States market. We model the supply side of the market on the hypothesis of profit-maximization using a multiproduct technology. Our approach is unique in that we explicitly incorporate production decisions into the model and we explicitly model different product types rather than an aggregate "fish product". The model thus permits the estimation of elasticities of demand and supply for specific product types. As a result, we can analyze the process of both demand and supply subst itution induced by exogenous changes on the market for cod products. 1