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Evaluating the Law of one Price Using Micro Panel Data: The Case of the French Fish Market
Author(s) -
Gobillon Laurent,
Wolff François-Charles
Publication year - 2016
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aav008
Subject(s) - fish <actinopterygii> , product (mathematics) , law of one price , quality (philosophy) , economics , fishery , line (geometry) , business , mid price , price level , monetary economics , biology , philosophy , geometry , mathematics , epistemology
This paper investigates spatial variations in product prices using an exhaustive micro dataset on fish transactions. The data includes all transactions between vessels and wholesalers that occurred within local fish markets in France during 2007. Spatial disparities in fish prices are sizable even after taking into account fish quality, time, and unobserved seller and buyer heterogeneity. The price difference between local fish markets can be explained to some extent by distance, but mostly by a coast effect related to market locations on the Atlantic and Mediterranean coasts. We also propose a new approach for identifying groups of interconnected local fish markets based on the activity of sellers and buyers within these markets. We show that most markets on the Atlantic coast are well connected, and that variation in prices across these markets is very small and in line with the law of one price.