Import penetration and price relationships: An empirical analysis of the US catfish market

The U.S. catfish aquaculture industry has undergone a continuous and alarming contraction over the last 15 years or so. The rapid increase in cheaper imports, which has coincided with the decline in the domestic catfish farming industry, is being blamed by industry commentators as a major cause of the decline. The impact of increased market share of imports on prices is of particular significance as prices are fundamental to the market process. We use an innovative approach to understand the impact of import shares on the linkage among prices in the U.S. catfish market. We divide the time-series data on market prices into high-import and low-import regimes using empirical techniques and analyze the difference in responsiveness of prices to shocks in the two regimes. Our main finding is that the domestic prices at the farm and processor level have become more responsive to shocks in each other and in themselves in the high-import regime.