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Spatial Price Transmission and Trade in the European Dairy Sector

Author

Listed:
  • Bakucs, Z.
  • Benedek, Z.
  • Fertö, I.

Abstract

There exists a large literature on spatial price transmission in agro-food sectors, but research on milk sector is relatively limited. In addition, we cannot generalize the results of these studies due to their diversity in terms of methodology, periods and countries. The aim of the paper is precisely to generalize, or at least broaden the evidence on horizontal price transmission in European Union dairy market. We employ two stages approach. First, we test whether Law of One Price exists among European Union member states. Second, we try to explain our findings based on gravity model framework in a binary choice setting. Our results are in line with theoretical expectations: the volume of milk traded and Eurozone membership positively, the geographical distance negatively affects the probability of perfect price transmission. In addition, we show that horizontal price transmission is dependent on political group variables (New Member States versus Old Member States).

Suggested Citation

  • Bakucs, Z. & Benedek, Z. & Fertö, I., 2019. "Spatial Price Transmission and Trade in the European Dairy Sector," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 11(2), June.
    • Handle: RePEc:ags:aolpei:294151
    DOI: 10.22004/ag.econ.294151
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    Cited by:

    1. Maria Mercè Clop-Gallart & María Isabel Juárez & Montserrat Viladrich-Grau, 2021. "Has the euro been fattening the European pig meat trade?," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(12), pages 500-510.
    2. Marwa Ben Abdallah & Maria Fekete Farkas & Zoltan Lakner, 2020. "Analysis of Dairy Product Price Transmission in Hungary: A Nonlinear ARDL Model," Agriculture, MDPI, vol. 10(6), pages 1-14, June.
    3. Monika Roman & Michał Roman, 2020. "Milk Market Integration between Poland and the EU Countries," Agriculture, MDPI, vol. 10(11), pages 1-17, November.

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