The market for farmed white fish in the Mediterranean countries is dominated by European seabass (Dicentrarchus labrax) and gilthead seabream (Sparus aurata). Generally, both species are farmed and sold by the same companies, since they share the same technology and environmental conditions. Greece and Turkey lead the market in a framework of price competition and low product differentiation. Substitution across country of origin for the same species has been tested and confirmed in previous research, but there is no evidence so far regarding substitution across the two different species. Price integration is tested with the two species and countries in the Spanish and Italian markets. Both countries account for the biggest consumption of seabass and seabream.
All the price series were found to be non-stationary, excepting Spanish imports of Greek seabass and seabream. A VAR system rejected any causal relation across the two species and, by definition, substitution across Greek and Turkish farmed white fish must be rejected given the latest were found non-stationary. However, it cannot be rejected in the case of Turkish seabass and seabream, in which a weak exogeneity test found seabass prices as a causal influence of seabream prices.
All Italian import prices are non-stationary, allowing combined substitution analysis across countries and species. Johansen tests show one single cointegrating vector in which Turkish imports cause changes on the price of Greek imports of both species. Turkish seabass substitutes Greek seabass and seabream in the Italian market, as well as Turkish seabream, which is, indistinctly, a substitute for Greek bream and bass.
Substitution across the two species can not be rejected in the Italian market, as well as in the Turkish imports of seabass and seabream in Spain. On the opposite, Greek imports appear to be differentiated in the Spanish market, both in terms of country of origin and across the two species. Despite the strong similarities in consumer preferences in the two countries, the involvement of Greek and Turkish companies in the domestic value chains differs and may explain any differences in the properties of the price series and the results of the analysis.