IMPACTS OF TRADE COSTS ON NORWEGIAN EXPORT OF FARMED SALMON

Norway accounts for more than half of the global production of Atlantic salmon, and the country's export of farmed salmon amounts to 15 % of the mainland export value (oil and gas excluded). Trade costs, including tariffs, transportation costs, and non-tariff barriers, vary substantially between the wide range of destinations that the more than 80 exporters serve. While trade costs are relatively low to the nearby European Union destinations, they are in general higher to more distant markets that require transportation by plane, higher cross-border transaction costs, and in many cases higher tariffs. More knowledge about how trade costs affect export revenue is important, e.g., in order to assess potential gains from future trade agreements.      

Focusing on whole fresh salmon, that makes up 80% of the export value, we utilize a unique set of transaction level custom data (period 2004-2014) that is linked to export firm information. For all destinations we add specific information about trade costs, most important tariffs applied to Norway, distance and transport mode, and the usual gravity variables. In particular, we investigate: 1) characteristics of firms that serve destinations with high trade costs (e.g., productivity, extensive and intensive margin); 2) the association between trade costs and exporters' market share; and 3) how trade costs affect firms' export revenues, decomposed in price and quantity effects.