Factors affecting the demand and price elasticity for Little Tuna in Kotabaru District, South Kalimantan, Indonesia

Abstract

The research focused on factors affecting the demand and price elasticity for tittle tuna (Euthynnus affinis) in Kotabaru District, South Kalimantan Province of Indonesia. A total of 34 gillnet ship-owners were selected as the respondents to be further interviewed using questionnaire. Three independent variables i.e. price of little tuna (X1) at fishermen, price of little tuna at consumers (X2) and the price of Indian mackerel as substitute goods (X3 ) were tested to determine whether they had a significant effect on the demand for little tuna (Y). Data were input into MINITAB software and analyzed with multiple linear regressions. Data were normally distributed and free from multicollinearity and autocorrelation. The results were tested with the F-test and t-test at a confidence level of 95%. The regression equation of the model was expressed as: LnY = 29.57 + 0.524LnX1 - 0.719LnX2 - 2.175LnX3. More than 64% of variability of little tuna demand was explained by the independent variables and the rest of 36% was attributed to other variables not included in the model equation. The demand for little tuna was simultaneously significantly affected by the independent variables tested (P < 0.01). Further analysis separately showed that X1 and X2 had no significant effect on the little tuna demand (P > 0.05), while X3 in the model showed an evidence of a positive relationship (P < 0.01). The price elasticity of demand for little tuna was categorized perfectly inelastic. The changes in the prices of little tuna and Indian mackerel are complementary, and the preference is independently selected by the consumers.