An inverse system for fish species in Spain

In this paper the own price, cross price and scale flexibilities for nine key fish species consumed in Spain are estimated. A market delineation study had previously identified three separate fish groups. For each group, long run inverse demand relationships were estimated using the Inverse Ideal Demand System (IAIDS). A system of equation models was developed using the vector error correction model (VECM) approach. Johansen's multivariate approach was used to obtain estimates of the long-run steady state relationships (vectors) between budget shares, fish quantity consumed and total fish expenditure. The species generally had correct signs for own price flexibilities. Cross price flexibilities, where significant, were also negative. This implies that the species within the groups are substitutes, confirming the results of the previous market delineation analysis. The scale flexibilities suggest that the fish are generally luxury goods, although some species (e.g. hake, cuttlefish, squid and tuna) may be considered necessities in the Spanish market.