IDEAS home Printed from https://ideas.repec.org/a/ags/remaae/12344.html
   My bibliography  Save this article

Another Look at Price Levelling and Price Averaging in the Sydney Meat Market

Author

Listed:
  • Griffith, Garry R.
  • Green, W.
  • Duff, G.L.

Abstract

Simultaneous equation techniques are used to re-examine the behaviour of monthly wholesale and retail price spreads for beef, lamb and pork in Sydney over the period 1971-1988, so as to understand the factors determining the relationships between the prices at the different market levels. Hypotheses tested relate to price levelling and price averaging, and to marketing cost and turnover effects. Using the preferred three-stage least squares estimates, price levelling is confirmed at both wholesale and retail for all meats, however contrary to earlier results there is no evidence of price averaging in any of the meats. Costs are only important determinants for beef at wholesale and lamb at retail, and only the beef and lamb wholesale spreads and the lamb retail spread are negatively influenced by turnover. A structural change test reveals significantly different behavioural responses in the 1980s compared to the 1970s, so the model is re-estimated for just the 1980s. The results generally agree with those from the longer sample, with the only change being at the retail level where costs become significant for beef as well as lamb. However the level of explanatory power for the 1980-1988 models is substantially reduced from that of the full sample models.

Suggested Citation

  • Griffith, Garry R. & Green, W. & Duff, G.L., 1991. "Another Look at Price Levelling and Price Averaging in the Sydney Meat Market," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 59(02), pages 1-13, August.
    • Handle: RePEc:ags:remaae:12344
    DOI: 10.22004/ag.econ.12344
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/12344/files/59020189.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.12344?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Griffith, G. R. & Whitelaw, R. A., 1975. "Sydney Meat Marketing Margins: January 1971 to June 1974," Archive 260383, New South Wales Department of Primary Industries Research Economists.
    2. Naughtin, John C. & Quilkey, John J., 1979. "Pricing Efficiency In The Retail Meat Market," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 23(1), pages 1-14, April.
    3. Griffith, Garry R., 1974. "Sydney Meat Marketing Margins - An Econometric Analysis," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 42(04), pages 1-17, December.
    4. Garry R. Griffith & Walter B. Moore, 1991. "Livestock Production Policies And Meat Processing Margins: The Case Of New Zealand, 1967‐1988," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 35(1), pages 21-48, April.
    5. John C. Naughtin & John J. Quilkey, 1979. "Pricing Efficiency In The Retail Meat Market," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 23(1), pages 48-61, April.
    6. Michael K. Wohlgenant, 1989. "Demand for Farm Output in a Complete System of Demand Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 241-252.
    7. Wohlgenant, Michael K. & Haidacher, Richard C., 1989. "Retail to farm linkage for a complete demand system of food commodities," Technical Bulletins 312312, United States Department of Agriculture, Economic Research Service.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mullen, John D., 1995. "The Influence of Fat and Weight on the Price of Lamb in the Homebush Livestock and Wholesale Markets," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 63(01), pages 1-13, April.
    2. Sibly, Hugh, 2002. "Loss averse customers and price inflexibility," Journal of Economic Psychology, Elsevier, vol. 23(4), pages 521-538, August.
    3. Adusei Jumah, 2004. "The long run, market power and retail pricing," Empirical Economics, Springer, vol. 29(3), pages 605-620, September.
    4. Zhao, Xueyan & Mullen, John D. & Griffith, Garry R. & Griffiths, William E. & Piggott, Roley R., 2000. "An Equilibrium Displacement Model of the Australian Beef Industry," Research Reports 28007, New South Wales Department of Primary Industries Research Economists.
    5. Mounter, Stuart W. & Griffith, Garry R. & Piggott, Roley R. & Mullen, John D., 2005. "The Relative Payoffs From R&D and Generic Advertising Expenditure by the Australian Pig Industry," Working Papers 12943, University of New England, School of Economics.
    6. Hahn, William F. & Green, Richard D., 2000. "Joint Costs In Meat Retailing," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(1), pages 1-19, July.
    7. Chung, Kit C. & Griffith, Garry R., 2009. "Another look at market power in the Australian fresh meat industries," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 17, pages 1-18.
    8. Mounter, Stuart W. & Griffith, Garry R. & Piggott, Roley R. & Mullen, John D., 2005. "The Payoff from Generic Advertising by the Australian Pig Industry: Further Results Relative to the Payoff from R&D," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 13.
    9. Hugh Sibly, 1995. "Price Dynamics in Repeat‐Purchase Markets," The Economic Record, The Economic Society of Australia, vol. 71(2), pages 179-190, June.
    10. Griffith, Garry R. & Jamandre, W.E. & Piggott, Roley R., 1992. "A Note on Price Levelling and Price Averaging in Sydney Retail Vegetable Price Spreads," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 60(01), pages 1-13, April.
    11. Morales, L. Emilio, 2017. "The Effects of International Price Volatility on Farmer Prices and Marketing Margins in Cattle Markets," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(3), December.
    12. Mullen, John D. & Alston, Julian M., 1995. "The Impact on the Australian Lamb Industry of Producing Larger Leaner Lamb," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 62(01), pages 1-19, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Griffith, Garry R. & Moore, Walter B., 1991. "Livestock Production Policies And Meat Processing Margins: The Case Of New Zealand, 1967-1988," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 35(1), pages 1-28, April.
    2. Chenhall, D. & Fraser, R.W. & Lloyd-Smith, J., 1990. "Beef Quality Preferences in Western Australia," Discussion Papers 232272, University of Western Australia, School of Agricultural and Resource Economics.
    3. Hugh Sibly, 1995. "Price Dynamics in Repeat‐Purchase Markets," The Economic Record, The Economic Society of Australia, vol. 71(2), pages 179-190, June.
    4. Sibly, Hugh, 2002. "Loss averse customers and price inflexibility," Journal of Economic Psychology, Elsevier, vol. 23(4), pages 521-538, August.
    5. Dent, Siobahn K. & Piggott, Roley R. & O'Donnell, Christopher J. & Griffith, Garry R., 2003. "Does Excluding Cross-commodity Interactions Matter? Beef and Lamb in Australia," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57859, Australian Agricultural and Resource Economics Society.
    6. Mullen, John D. & Alston, Julian M., 1995. "The Impact on the Australian Lamb Industry of Producing Larger Leaner Lamb," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 62(01), pages 1-19, April.
    7. J. W. Freebairn, 1981. "Assessing Some Effects Of Inflation On The Agricultural Sector," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 25(2), pages 107-122, August.
    8. Lee, Hanbin & Sexton, Richard J. & Sumner, Daniel A., 2021. "Economics of Mandates on Farm Practices: Lessons from California’s Proposition 12 Regulations on Pork Sold in California," 2021 Annual Meeting, August 1-3, Austin, Texas 313920, Agricultural and Applied Economics Association.
    9. Jeffrey Hadachek & Meilin Ma & Richard J. Sexton, 2024. "Market structure and resilience of food supply chains under extreme events," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(1), pages 21-44, January.
    10. Griffith, Garry R., 1975. "A Cross-Spectral Approach To Measuring Pricing Efficiency In The New South Wales Pigmeat Market," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 43(04), pages 1-21, December.
    11. Griffith, Garry R. & Jamandre, W.E. & Piggott, Roley R., 1992. "A Note on Price Levelling and Price Averaging in Sydney Retail Vegetable Price Spreads," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 60(01), pages 1-13, April.
    12. Quilkey, John J., 1986. "Promotion Of Primary Products - A View From The Cloister," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 30(1), pages 1-15, April.
    13. Diao, Xinshen & Robinson, Sherman & Somwaru, Agapi & Tuan, Francis, 2002. "Regional and National Perspectives of China’s Integration into the WTO: A Computable General Equilibrium Inquiry," Conference papers 331002, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    14. Kinnucan, Henry W., 2003. "Optimal generic advertising in an imperfectly competitive food industry with variable proportions," Agricultural Economics, Blackwell, vol. 29(2), pages 143-158, October.
    15. Brester, Gary W. & Wohlgenant, Michael K., 1990. "Effects of Measurement Error in Disappearance Data on Estimated Demand Elasticities for Keats," 1990 Annual meeting, August 5-8, Vancouver, Canada 271039, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Youhong Lee & Qingxiao Li & Metin Çakır, 2023. "Elasticities of substitution between marketing and farm inputs in a complete system of food commodities," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(3), pages 1450-1471, September.
    17. Hansmire, Michelle R. & Willett, Lois Schertz, 1993. "Price Transmission Processes: A Study of Price Lags and Asymmetric Price Response Behavior for New York Red Delicious and McIntosh Apples," Research Bulletins 123011, Cornell University, Department of Applied Economics and Management.
    18. Griffith, Garry R. & Giles, L.R., 1977. "Pig Carcase Pricing Models: A Preliminary Investigation," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 45(04), pages 1-13, December.
    19. P. Syrovátka & I. Lechanová, 2005. "Price transmission and estimations of price elasticity of secondary demand functions: application on commodity market for food grains," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 51(7), pages 293-303.
    20. Kaiser, Harry M., 1995. "An Analysis of Generic Dairy Promotion in the United States," Research Bulletins 122997, Cornell University, Department of Applied Economics and Management.

    More about this item

    Keywords

    Demand and Price Analysis;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:remaae:12344. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.