The price elasticity of the demand and revenue increase for some fishery products

Abstract

The price elasticity of demand (PED) measures the variation of the quantity demanded due to a price variation. A concept closely related to PED is the Revenue Increase (RI) that measure weather the demand is elastic or inelastic. The main goal of this paper was to estimate PED and its impacts on the income and demand of six fishery products from Mexico, such as Salmon, Tuna, Sardine, Shrimp and Prawn, Trout and Tilapia. The data were obtained from the Foreign Agriculture Service of United States Department of Agriculture (1,998-2,018 Period) through the tables provided and published on the Internet (secondary data). In this paper, the arc method was applied to calculate both PED and RI of the selected fishery products. All of these products showed an elastic demand price in almost all years of the period under study; while the RI presented no defined trend. There was a significant positive correlation between export reference price of demand and income for Tuna and significant negative for Trout and Sardine. There was a significant negative correlation between exported volume and export reference price for Shrimp and Prawn, Trout and Sardine and significant positive for Tuna. For Salmon and Tilapia, the associations were not significant. It was observed no clear effects of the PED on income; aspect that violates the PED theory.

Keywords

• economics
• elasticity
• price of demand
• sea products
• revenue increase