Norway is the world´s second largest seafood exporter, and the leading exporter of farmed salmon. A large number of firms export seafood to 145 different markets. When excluding oil and gas, seafood accounts for about 1/4 of the total Norwegian export, with aquaculture products accounting for 70 % of the value. Consequently, this industry’s performance in competitive export markets is important for the Norwegian economy. In this paper, we utilize highly disaggregated custom data to investigate to what degree Norwegian exporters of salmon offer quantity discounts to foreign buyers.
Variation in unit value within narrowly defined HS-codes has most commonly has been associated with quality in the trade literature. For example, a typically result from the widely-used gravity models is that exporters charge higher prices in more distant markets, explained by quality upgrading to reduce the importance of transportation costs. However, in business-to business transactions observed differences in prices between buyers might also be explained by quantity discounts, or second-degree price discrimination. This aspect is often neglected in standard gravity models used to investigate main determinants of exporters’ performance.
We provide evidence for price discrimination in transaction-level export data for Norwegian salmon. Within narrowly defined exporter-good-year categories we utilize observed variation in unit value among importers to estimate the elasticity of prices with respect to purchased quantities. The size of the quantity discount is estimated for different goods and different transport modes.