Evaluating the law of one price in ornamental fish market in Iran

Abstract

The main objective of this paper is to investigate the law of one price for ornamental fish market in Iran. To achieve this, the domestic and world prices of ornamental fish were examined monthly from the beginning of 2009 to the end of 2014. Autoregressive Distributed Lag (ARDL) models were used to analyze data. To evaluate the law of one price in ornamental fish market in the short-term and longterm periods, the impact of world price of ornamental fish on its domestic price was examined. According to Autoregressive Distributed Lag model in the short term period, the effects of domestic price from the last month were studied on the current month of investigation in addition to the effects of foreign prices. As a result of the econometric analysis, the global price of the ornamental fish had a positive and significant effect on the domestic price of fish in the short-term and long-term periods in addition to the positive effects of domestic price of fish from the last month on the current month in the short term period. In other words, the law of one price for the ornamental fish market was significantly accepted in the studied years. The estimated error correction factor in the ornamental fish market was 0.31 which indicated that in any time period 31% of short-term imbalance could be corrected. Therefore, adopting the required supportive policies is recommended to reduce the domestic prices sensitivities of the ornamental fish to their global price fluctuations.