Analysis of supply response of black tiger shrimp production using nerlove model

Abstract

This study aims to analyze the effect of black tiger shrimp price and other factors on the shrimp area in the Mekong Delta using the supply response function based on the Nerlovian partial adjustment model. Using quarterly panel data collected from four provinces (Ca Mau, Bac Lieu, Soc Trang, and Kien Giang) for the period of 2014 to 2017, the estimates in the supply response are obtained from Fixed-Effects (FE) method. Results indicate that the adaptive expectation hypothesis to the simple Cobweb model is likely to best fit the data. The estimates of the supply response model show that information used for expected price formation quickly responded in making a decision of black tiger shrimp production. In both the short run and long run, the expected price has a significant effect in directing black tiger shrimp farmers to formulate the supply response decision. The acreage response elasticity is more elastic.