DP11757 The local effects of an innovation: Evidence from the French fish market

Author(s): Laurent Gobillon, Fran├žois-Charles Wolff
Publication Date: January 2017
Keyword(s): difference in differences, discontinuity, factor models, fish, innovation, product prices, product quality, synthetic controls
JEL(s): L11, Q22
Programme Areas: International Trade and Regional Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11757

In this paper, we investigate the effect on quality, quantity and prices of an innovative fishing gear introduced for a subsample of vessels on a single wholesale fish market in France. Estimations are conducted using transaction data over the 2009-2011 period during which the innovation was introduced. Using a difference-in-differences approach around the discontinuity, we find that for the treated the innovation has a large effect on quality (29.2 percentage points) and prices (23.2 percentage points). A shift in caught fish species is observed and new targeted species are fished very intensively. We also quantify the treatment effect on the treated market from aggregate market data using factor models and a synthetic control approach. We find a sizable effect of the innovation on market quality which is consistent with non-treated vessels adapting their fishing practices to remain competitive. The innovation has no effect on market quantities and prices.