Consumption relationship analysis on Salmon and Cod : quadratic Almost Ideal Demand System approach

Sammanfattning: There is an endangerment of cod stocks in Sweden. It has been found that farmed salmon from aquacultures is a more sustainable alternative to the overfished and endangered cod. In terms of the consumption relationship between salmon and cod, is it complementary or substitutional? This thesis conducted a consumption analysis on the economic relationship between salmon and cod by Quadratic Almost Ideal Demand System (QUAIDS) approach using data on daily barcode observations from ICA Maxi Nacka, Sweden. The own-price elasticities for salmon and cod showed that the own-price elasticities of fish are negative, implying that both cod and salmon are normal goods for Swedish consumers. This is in line with previous literature and expectations. The hypothesis of salmon being a substitute to cod was rejected as the cross-price elasticities results implied that salmon and cod are complements to each other. There is scarcity of cod demand and substitutions studies that are published. This complication gave this study the possibility to fill a small part of that huge gap of cod studies and contribute with new research on the topic.