two years before. Basically this equation describes that how many percentage of
salmon is going to be produced when the smolt input is increased by 1%.
Combining these above two equations, it is possible to see the effect of the price of
farmed salmon in year t-3 on the supply quantity in year t.
Equation3: Demand equation (price determination) model
log !"#$!!" = !! ∗ log !"##$!!" + !! ∗ log!(!"##$%!!! ) + !! ∗ ! + !! + !!"
Demand equation (equation3) has price of farmed salmon as the dependent
variable. Explanatory variable
is supply quantity, currency rate and time trend.
the price is determined by total supply in the market, the total supply amount
is used in here instead of supply per license. Currency rate is the real rate between
France and Norway. Because France is the biggest importer of Norwegian Farmed