An analysis of price formation in the Dutch mussel industry

Abstract

This paper presents the findings of a study aimed at identifying the determinants of price formation in the mussel industry in the Netherlands. The Netherlands is one of the major producers of mussels in Europe and the largest exporter. As such it is expected to have an important influence on price formation in Europe. The investigation of price formation attempted to identify the most important determinants of price at the wholesale market level and to test any interactions between the Dutch market and other markets in Europe. Estimation was by means of an econometric demand analysis using monthly data from the single auction market at Yerseke. The Dutch market was found to be highly competitive, with price highly responsive to supply, quality and seasonality. This short-term price elasticity is paired with price-inelastic short-term supply. Therefore there is potential for shifting the demand curve without inducing a shift in supply. The implications of these results are discussed and suggestions for marketing put forward