This paper provides an in-depth analysis of shrimp price flexibility and the impact of decreases in quantity supplied of shrimp on world price. Seemingly Unrelated Regression (SUR) is utilized to determine price flexibility of shrimp and changes in quantity supplied on world shrimp price. The key objective of this paper is to use Huang's direct procedure and Eales' indirect technique for calculating price flexibilities to evaluate the effects of a reduction in quantity supplied of 5%, 10%, 20%, and 30% from shrimp aquaculture sources on world price. Estimated price flexibility for the quantity supplied of aquaculture shrimp was -0.32. A 5% decrease in quantity supplied increases price by 6%, while a 10 % decrease, increases price by 14%. A decrease in quantity supplied of 20%, increases price by 22%, but a 30% decrease, increases price by 36%. The results indicate that if world supply should plummet, due to deteriorating environmental conditions, such as disease or pollution, world shrimp price will increase substantially.
Technology innovation and diffusion in shrimp aquaculture has resulted in increased quantity and supply of shrimp to satisfy expanding consumer demand. Logistic growth curves are estimated to depict the rate of diffusion of shrimp aquaculture technology throughout the major shrimp producing countries. A time series/cross sectional model is applied to 1985-1991 and 1995-1999 production data to evaluate factors influencing shrimp production growth rates. Calculated market shares for each country indicate that operating costs, lagged shrimp price, number of hectares in production, lagged export quantity of shrimp, and market structure influence the aquaculture technological diffusion rates and shrimp produced, and suggest that countries that incorporate technologies into their production system benefit the most from increased market share.
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