FISHERY BULLETIN: VOL. 87. NO. 2, 1989 



Table 2.— Parameter estimates of dynamic model of spatial 

 price differentials for Alaska and Pacific coast fixed gear 

 ex-vessel and Tokyo wtiolesale sablefisfi markets. [( - 

 y] denotes current time period less j time periods. Stan- 

 dard deviations in parenttieses. 



NOTE: Two-stage least squares estimates of final version of un- 

 restricted model given by Equation (1), 



* denotes statistically significant at 5%. 



forms of short-nin market integration were rejected 

 for Alaska at a 5% level of significance, as indicated 

 in Table 1. 



The null hypothesis of long-run market integra- 

 tion was not rejected for the Pacific coast at a 5% 

 level of significance, as reported in Table 1. How- 

 ever, given that this nonrejection was only marginal, 

 the evidence was only weak for long-run integra- 

 tion. The alternative null hypothesis of market 

 segmentation for the Pacific coast was therefore 

 tested and decisively not rejected; market segmen- 

 tation is the most likely market relationship.* 



*The results of direct Granger causality tests discussed in foot- 

 note 3 further indicated no long-run net price leadership between 

 the Tokyo wholesale and Pacific coast ex-vessel fixed gear markets, 

 thereby reinforcing the conclusion of no market integration by 

 price. Nonetheless, this relationship could have changed over 

 1987-89. 



To summarize, the Tokyo wholesale and Pacific 

 coast ex-vessel fixed gear sablefish markets are 

 likely to be segmented over the period 1981-86. 

 Changes in the Tokyo wholesale market prices will 

 have no effect, immediate or lagged, on the Pacific 

 coast market. Instead, the local market price 

 depends only upon its own lagged values and local 

 market conditions. Pacific coast fixed gear ex-vessel 

 sablefish markets operate independently of the 

 Tokyo central wholesale market. Should the expan- 

 sion of sablefish export markets be considered im- 

 portant, then the general lack of communication of 

 prices and other market information should be 

 targeted for improvement. 



The Tokyo wholesale and Alaska fixed gear ex- 

 vessel sablefish markets are well integrated by 

 prices in the sense of a long-run tendency in the 

 short-run adjustment process. Changes in Alaska ex- 

 vessel sablefish prices can be attributed to changes 

 in Tokyo wholesale prices and past spatial price 

 differentials between the Tokyo and Alaska mar- 

 kets. Supply and demand conditions in the Tokyo 

 central wholesale market are communicated effec- 

 tively to the Alaska ex-vessel market and influence 

 prices there irrespective of previous local conditions. 

 In fact, previous local prices and localized market 

 conditions contribute little to current Alaska ex- 

 vessel prices. These two markets are well integrated 

 by prices in this manner, although traders may fail 

 to connect the two markets through commodity 

 flows in the short nm, particularly during the winter 

 months. 



The absence of any form of full short-run market 

 integration for Alaska suggests that a price change 

 in the Tokyo wholesale market is not immediately 

 and fully passed on to the Alaska fixed gear ex- 

 vessel market within one month. Given the impor- 

 tant reduction in Alaska fishing during the winter 

 months and the dispersed and often geographically 

 isolated nature of harvesters, processors, and 

 brokers, this result is not surprising. Yet, while the 

 two markets are not fully linked by prices in the 

 short run (one month), a weaker form of short-run 

 market integration may still be taking place due to 

 the economic forces causing Tokyo wholesale 

 market price changes generally to be reflected in 

 the Alaska fixed gear ex-vessel price level. 



To examine one possible form of incomplete short- 

 run integration by price between the Alaska and 

 Tokyo markets, the modified Wolfram model was 

 applied. This approach allows for asymmetric price 

 responses in the Alaska fixed gear ex-vessel market 

 and price transmission from the Tokyo central 

 wholesale market over a time period longer than a 



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