Analysis of Price Transmission Along the Food Chain

Abstract

The interest in marketing margins and price transmission has recently gained remarkable momentum and the amount of studies on this subject is rapidly growing. There is a myriad of questions about prices and margins investigated by these studies, yet new questions are surfacing as markets and business practices change with an impressive speed. Wohlgenant (2001), in his survey on marketing margins, identifies some of the questions puzzling researchers and policy makers alike. For example: Are marketing margins too large? Why are margins different among products? How have...

Vertical price transmission in the Egyptian tomato sector after the Arab Spring

“…Using an asymmetric ECM, von Cramon-Taubadel (1998) obtains the same results for the German pork market. Vavra and Goodwin (2005) use threshold vector ECMs to appraise the links between retail, wholesale and farm-level prices for the US beef, chicken and egg markets. Research results indicate that there are significant asymmetries in both terms of speed and magnitude of the adjustment, in response to positive and negative price shocks.…”

Vertical price transmission analysis: the case of milk in the Slovak dairy sector

“…In Houck´s method asymmetric price transmission is examined by price variables divided into decreasing and increasing stages (Shadmehri Ahmadi and Ahmadi, 2010). Vavra and Goodwin (2005) explain that Houck's method was extended by Ward (1982) who included lags of exogenous variables variables such that the delay in effects and the length of lags can differ depending on whether the causal price is increasing or decreasing. Boyd and Brorsen (1988) were the first to use lags to differentiate between the magnitude and the speed of transmission.…”

Agricultural Hierarchies

“…Indeed, economists have shown theoretically (Weldegebriel 2004) and empirically (Muslim 2011) that oligopolistic structures in the chain slow down or even prevent full price transmission. Vavra and Goodwin (2005) provide an example of a lagged and incomplete price transmission in Fig. 2.1 which can be applied to our milk and dairy example: the dairy in this illustration immediately starts to pass on the price increase, but cannot fully pass on the shock experienced at the farmgate level.…”

“…Agricultural economists largely agree that farming, particularly in small-structured systems, suffers from a structural disadvantage. Many farmers deal with a few fertiliser, pesticide and tractor producers (Vavra and Goodwin 2005) on the one hand, and with a few slaughterhouses, mills and dairies on the other. Empirical evidence from all over the world indicates that lags and limitations in price transmission rarely work to the advantage of farmers (e.g.…”