Working Paper: CEPR ID: DP9586
Authors: Laurent Gobillon; Patrice Guillotreau; François-Charles Wolff
Abstract: This paper investigates spatial variations in product prices using an exhaustive micro dataset on fish transactions. The data record all transactions between vessels and wholesalers that occur on local fish markets in France during the year 2007. Spatial disparities in fish prices are sizable, even after fish quality, time, seller and buyer unobserved heterogeneity have been taken into account. The price difference between local fish markets can be explained to some extent by distance, but mostly by a coast effect (analogous to a border effect in the literature on the law of one price) related to separate location on the Atlantic and Mediterranean coasts. In particular, fish and crustacean prices are 34% higher on the Mediterranean coast. The law of one price is verified for almost all species when considering only local fish markets on the Atlantic coast.
Keywords: commodity price; fish; local markets; panel data
JEL Codes: L11; Q22; R32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| significant spatial variations in fish prices exist (P22) | local market effects explain about 14% of price variations for monkfish (F12) |
| observable fish characteristics account for approximately 40% of price variations (L11) | local market effects explain about 14% of price variations for monkfish (F12) |
| unobserved heterogeneity among vessels and buyers explains only 6% and 35% (F12) | local market effects explain about 14% of price variations for monkfish (F12) |
| fish prices are 34% higher on the Mediterranean coast compared to the Atlantic coast (Q22) | coast effect (O56) |
| geographic separation of the Atlantic and Mediterranean coasts (N93) | absolute law of one price does not hold across all local fish markets (D41) |
| high transportation costs prevent market integration (L91) | absolute law of one price does not hold across all local fish markets (D41) |