Journal ArticleDOI
Imperfect Price Transmission: Is Market Power Really to Blame?
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In this paper, a model of price transmission where both oligopoly and oligopsony power co-exist and where industry technology is assumed to be characterised by variable input proportions is presented.Abstract:
Several studies in the literature have argued that price transmission in vertically-related markets is imperfect, i.e. that farm input price changes are not fully passed-through to the final product price. Market power, notably oligopoly, is presumed to be the principal source of imperfect price transmission. To date, the impact of oligopsony (buyer) power on the degree of price transmission has not been evaluated using a formal theoretical model. Moreover, neither has the combination of oligopoly and oligopsony despite the fact that its influence has been formally acknowledged in both the UK and some European food markets. This paper makes a contribution to the literature by developing a model of price transmission where both oligopoly and oligopsony power co-exist and where industry technology is assumed to be characterised by variable input proportions. It shows that taking the degree of price transmission in a perfectly competitive market as a benchmark, oligopoly and oligopsony power do not necessarily lead to imperfect price transmission, although they can. Indeed, they may counteract each other's impact on the degree of price transmission. The key to these outcomes is to be found in the functional forms for retail demand and farm supply.read more
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Report SeriesDOI
Analysis of Price Transmission Along the Food Chain
Pavel Vavra,Barry K. Goodwin +1 more
TL;DR: The interest in marketing margins and price transmission has recently gained remarkable momentum and the amount of studies on this subject is rapidly growing as mentioned in this paper, yet new questions are surfacing as markets and business practices change with an impressive speed.
Journal ArticleDOI
Asymmetric price transmission in the Spanish lamb sector
Monia Ben-Kaabia,Jose Maria Gil +1 more
TL;DR: In this article, the authors investigated the non-linear adjustment between farm and retail prices in the lamb sector in Spain, using a three-regime threshold autoregressive model.
Posted Content
Milking the Prices: The Role of Asymmetries in the Price Transmission Mechanism for Milk Products in Austria
TL;DR: In this paper, the authors assess empirically the vertical price transmission mechanism between producer and consumer prices of milk products in Austria using monthly data for the period from January 1996 to February 2010.
Journal ArticleDOI
Forty Years of Price Transmission Research in the Food Industry: Insights, Challenges and Prospects.
TL;DR: In this paper, the authors focus on vertical markets such as the food chain and consider developments in theory, methods and data that help economists understand how information is conveyed between food consumers and agricultural producers.
Journal ArticleDOI
The competitiveness of agricultural product and input markets: a review and synthesis of recent research
TL;DR: The authors reviewed literature on competitiveness of agricultural product and input markets and concluded that there is little robust empirical evidence for food processing firms exerting buyer power, and there are limited data concerning vertical contracts between food processing and agriculture, but there is a small body of evidence concerning food retailer behavior and vertical coordination between food retailing and processing.
References
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Journal ArticleDOI
The estimation of the degree of oligopoly power
TL;DR: In this paper, the authors extend the use of econometric production theory techniques to ageneral class of oligopolistic markets and provide a framework which enables them to estimate the conjectural variation and test various hypotheses about noncompetitive behavior.
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Symmetric Pass-Through of Tariffs and Exchange Rates Under Imperfect Competition: An Empirical Test
TL;DR: In this paper, the authors examined the effect of tariffs and exchange rates on U.S. prices of Japanese cars, trucks and motorcycles, and found that the pass-through relation varies across products, ranging from about 0.6 for trucks to unity for motorcycles.
Journal ArticleDOI
Estimating asymmetric price transmission with the error correction representation: An application to the German pork market
TL;DR: In this article, an alternative specification based on the error correction representation is proposed and applied to transmission between producer and wholesale pork prices in northern Germany, showing that the margin is corrected more rapidly when it is squeezed relative to its long-run level than when it was stretched.
Journal ArticleDOI
Symmetric Pass-Through of Tariffs and Exchange Rates Under Imperfect Competition: An Empirical Test
TL;DR: In this article, the authors examined the effect of tariffs and exchange rates on U.S. prices of Japanese cars, trucks and motorcycles, and found that the long-run pass-through of the tariffs and the exchange rates are identical.