Abstract:
The shrimp harvesting sector is the largest component of the Southeastern United States fishing industry, accounting
for 57% of the total value of landings in the region in 1996. U.S. shrimp imports were valued at $2.6 billion in 1996. Together,
domestic production and imports of raw products support a large shrimp processing sector, which provides several thousand
jobs either directly or indirectly. In 1975 and 1984, the United States International Trade Commission investigated the shrimp
industry to determine whether the volume of shrimp imports was high enough to threaten domestic firms which were producing
articles similar to, or directly competitive with the imported products. In both studies, the commission concluded that no harm
was done to the processing sector. However, an analysis of the shrimp processing sector revealed that imports did have a
negative impact. The objective of this research is to examine the impact of shrimp processors performance (as measured by
processor’s margins) on industry structure (as measured by the number of processing firms in activity) using a non-stationary
Markov model. Results indicated significant margins changes on industry structure and size distribution. Specifically, the
narrowing of processors’ margins due to increased shrimp imports impacted more the small size firms than the medium or large
firms. Additionally, some shrimp processors (medium and large sizes) were able to remain in the industry by adjusting their
input mixes.
