Wholesale Demand for Fish in Greece

Abstract

Inverse demand systems explain price variations as functions of quantity variations. This article presents a dynamic inverse almost ideal demand system (AIDS) model based on recent developments on cointegration techniques and error correction model. The case of fish landed at Greek seaports appears to suit this model well. The results indicate that the underlying distance function is homothetic whereas the own-quantity flexibilities suggest that the responses of price to own-quantity changes are inelastic. Finally, the results of cross-quantity uncompensated flexibilities suggest that the substitution possibilities among fish grades are rather limited. The Allais interaction intensities verified the substitutability among fish grades as well.

KEYWORDS:

• AIDS
• error correction model
• fish demand
• Greece
• inverse demand systems

ACKNOWLEDGMENTS

I am indebted to Panos Fousekis and Achilleas Vassilopoulos for their helpful comments and suggestions on an earlier draft of this manuscript that have led to considerable improvement of this article. Any errors or omissions are my own responsibility.

Notes

Note. Unit root is based . In this equation x_t denotes the variables concerned the Equation (1). Table 1 reports the γ_t statistic (Dickey & Fuller, 1981). The test for no cointegration is given by a test for a unit root in the estimated residuals . The augmented Dickey-Fuller regression equation is given . In Table 1 a t-ratio test for α ₀ is reported for each equation. The econometric package used was SHAZAM 7.0 and for the unit root tests the critical value at 10% significance level is −3.13 and for cointegration test −4.15.

Note. Standard errors of certain coefficients are omitted because the associated coefficients have been derived from the theoretical restrictions. The Durbin Watson statistics are 2.18 and 1.83.

Note. Numbers in parentheses are standard errors.

*Statistically significant at 5% significance level.

Note. Numbers in parentheses are standard errors.

*Statistically significant at 5% significance level.

Note. Numbers in parentheses are standard errors.

*Statistically significant at 5% significance level.

Note. Numbers in parentheses are standard errors.

*Statistically significant at 5% significance level.

Eales and Unnevehr (1994), footnote 13, page 109.

EL.STAT excludes vessels with engine <19 HP.

The empirical results are not robust to the choice of equation to be dropped.

The log-likelihood values of full and diagonal adjustment models are 565.41 and 562.25, respectively, whereas the critical values of χ²distribution with three degrees of freedom at 5% and 1% significance level are 7.81 and 11.34, respectively.

The unconstrained short-run and long-run scale flexibilities as well as their asymptotic standard errors for the three fish grades are, respectively, First: −1.00 (0.10242) and −1.05 (0.10242), Second: −1.18 (0.3646) and −1.19 (0.3646), and Third: −0.85 (0.35509) and −0.80 (0.31155).

It must be pointed out that these are conditional elasticities and must be interpreted as such.

The LeChatelier principle states that long-run demand functions are more price and expenditure sensitive than their short-run counterparts. Thus, at the optimum price and expenditure elasticities are greater in long rather than short run (Silberberg, 1992, pp. 216–222).

Tables with calculated short-run and long-run own-price flexibilities with their asymptotic standard errors for the entire period under consideration are available from the author upon request.

Additional information

Notes on contributors

Stathis Klonaris

Stathis Klonaris, PhD, is an assistant professor in the Department of Agricultural Economics and Rural Development at Agricultural University of Athens. His research interests are focused on the economics of food policy and quality, modeling agricultural markets, and on Common Agricultural Policy (CAP) issues.