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Retail margins, price transmission and price asymmetry in urban food markets: the case of Kinshasa (Zaire)

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  • B Minten
  • S Kyle

Abstract

Some African food markets can still seem to operate inefficiently after price liberalisation. This seems mainly due to the existence of significant transaction costs because of small-scale operations, and is influenced by lack of grading, deficient infrastructure and information systems. It is shown in the case of retail markets in Kinshasa that search, supervision and other difficult-to-measure transactions costs are more important in the margin of food products than the measurable marketing costs (e.g., storage, transport). It is also shown through time series analysis that most of the price transmission between wholesale and retail happens in the same week and that price asymmetry, i.e., the different transmission of price increases compared with price decreases, is present for most products. Products characterised by relatively more standardisation and homogeneity are shown to have lower retail margins and to behave symmetrically. A model based on kinked demand curves and search costs might explain this asymmetric price behaviour.

Suggested Citation

  • B Minten & S Kyle, 2000. "Retail margins, price transmission and price asymmetry in urban food markets: the case of Kinshasa (Zaire)," Journal of African Economies, Centre for the Study of African Economies, vol. 9(1), pages 1-23.
    • Handle: RePEc:oup:jafrec:v:9:y:2000:i:1:p:1-23.
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    File URL: http://hdl.handle.net/10.1093/jae/9.1.1
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    Cited by:

    1. Thiago Cacicedo, 2022. "Cartels and asymmetric cost pass-through: evidence from Brazilian gas stations," Economics Bulletin, AccessEcon, vol. 42(4), pages 2034-2042.
    2. Escobal, Javier, 2005. "The Role of Public Infraestructure in Market Development in Rural Peru," MPRA Paper 727, University Library of Munich, Germany.
    3. Winter-Nelson, Alex & Temu, Anna, 2002. "Institutional Adjustment and Transaction Costs: Product and Inputs Markets in the Tanzanian Coffee System," World Development, Elsevier, vol. 30(4), pages 561-574, April.
    4. Firdu Gemech & John Struthers, 2007. "Coffee price volatility in Ethiopia: effects of market reform programmes," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(8), pages 1131-1142.
    5. Alam, Mohammad Jahangir & Begum, Ismat Ara & Buysse, Jeroen & McKenzie, Andrew M. & Wailes, Eric J. & Van Huylenbroeck, Guido, 2010. "Testing Asymmetric Price Transmission in the Vertical Supply Chain in De-regulated Rice Markets in Bangladesh," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61374, Agricultural and Applied Economics Association.
    6. Ahmed, Osama, 2018. "Vertical price transmission in the Egyptian tomato sector after the Arab Spring," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 50(47), pages 5094-5109.

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