Vertical Relationships in the Value Chain: An Analysis Based on Price Information for Cod and Salmon in Europe

In this report we investigate the value chains for two of the most important species in the sea food trade in Europe, cod and salmon, using only price data. For cod we investigate value chains from Norway to Portugal and within the UK, while we investigate the value chains from Norway and the UK into France and from Norway to Finland for salmon. For cod, both value chains seem highly competitive, although there is also increased concentration. As expected, given that several market integration studies have shown that Norwegian and Scottish salmon are close substitutes, the value chains between the two producers are also related. The value chains appear to be competitive at the first stages upstream. When one goes further up in the chain the picture is less clear. At some stages the chain still seems competitive, though this is most commonly associated with traditional chains where there are still small firms, and for the least processed products. The evidence against competition is strongest when the retailers are supermarkets. However, this does not seem to be a sign of utilization of market power, as supermarkets tend to have lower prices. Hence, for both species higher concentration mainly seems to be a necessary adjustment to exploit scale economies in new distribution technologies.