IDEAS home Printed from https://ideas.repec.org/a/spr/agfoec/v5y2017i1d10.1186_s40100-017-0087-8.html
   My bibliography  Save this article

The effect of EU 2006 sugar regime reform on vertical price transmission

Author

Listed:
  • Maurizio Aragrande

    (University of Bologna)

  • Mauro Bruni

    (Areté srl-Research & Consulting in Economics)

  • Alberico Loi

    (Areté srl-Research & Consulting in Economics)

  • Roberto Esposti

    (Marche Polytechnic University of Ancona)

Abstract

CAP regulation of sugar sector has frequently been questioned because of its potential effect on competition. In 2006 the CAP reform of the sugar sector established a relevant break in policy trend with potential albeit untargeted effects on price transmission. In 2012 DG AGRI commissioned a study to assess the effects of the 2006 reform of the EU sugar regime on the price transmission within the sugar sector. This paper highlights the effects of the new CAP sugar regime on sugar retail price and on the degree of competition and concentration in the sugar industry. Vertical price transmission is tested through econometric models. The relationship between concentration and competition is analysed putting in relation the concentration index and a modified version of the Lerner index. Results of empirical investigation show that vertical price transmission asymmetries still exist after the reform, which in turn contributed to increase sugar sector concentration, partly confirming the validity of the Structure-Conduct-Performance assumptions. The sugar market is far from efficient and the reform only created more favourable conditions for its improvement.

Suggested Citation

  • Maurizio Aragrande & Mauro Bruni & Alberico Loi & Roberto Esposti, 2017. "The effect of EU 2006 sugar regime reform on vertical price transmission," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-20, December.
    • Handle: RePEc:spr:agfoec:v:5:y:2017:i:1:d:10.1186_s40100-017-0087-8
    DOI: 10.1186/s40100-017-0087-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s40100-017-0087-8
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1186/s40100-017-0087-8?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. Awudu Abdulai, 2002. "Using threshold cointegration to estimate asymmetric price transmission in the Swiss pork market," Applied Economics, Taylor & Francis Journals, vol. 34(6), pages 679-687.
    2. Hamulczuk, Mariusz & Szajner, Piotr, 2015. "Sugar prices in Poland and their determinants," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 235489, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    3. Giliola Frey & Matteo Manera, 2007. "Econometric Models Of Asymmetric Price Transmission," Journal of Economic Surveys, Wiley Blackwell, vol. 21(2), pages 349-415, April.
    4. Digal, Larry N. & Ahmadi-Esfahani, Fredoun Z., 2002. "Market power analysis in the retail food industry: a survey of methods," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), pages 1-26.
    5. Pavel Vavra & Barry K. Goodwin, 2005. "Analysis of Price Transmission Along the Food Chain," OECD Food, Agriculture and Fisheries Papers 3, OECD Publishing.
    6. Joe S. Bain, 1951. "Relation of Profit Rate to Industry Concentration: American Manufacturing, 1936–1940," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 65(3), pages 293-324.
    7. Ball, Laurence & Mankiw, N Gregory, 1994. "Asymmetric Price Adjustment and Economic Fluctuations," Economic Journal, Royal Economic Society, vol. 104(423), pages 247-261, March.
    8. Goodwin, Barry K. & Harper, Daniel C., 2000. "Price Transmission, Threshold Behavior, And Asymmetric Adjustment In The U.S. Pork Sector," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(3), pages 1-11, December.
    9. Ferrucci, Gianluigi & Jiménez-Rodríguez, Rebeca & Onorante, Luca, 2010. "Food price pass-through in the euro area The role of asymmetries and non-linearities," Working Paper Series 1168, European Central Bank.
    10. Rezitis Anthony N & Stavropoulos Konstantinos S, 2011. "Price Transmission and Volatility in the Greek Broiler Sector: A Threshold Cointegration Analysis," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 9(1), pages 1-37, July.
    11. Jochen Meyer & Stephan von Cramon‐Taubadel, 2004. "Asymmetric Price Transmission: A Survey," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(3), pages 581-611, November.
    12. Céline Bonnet & Vincent Réquillart, 2013. "Impact of Cost Shocks on Consumer Prices in Vertically-Related Markets: The Case of The French Soft Drink Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1088-1108.
    13. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    14. Henry W. Kinnucan & Olan D. Forker, 1987. "Asymmetry in Farm-Retail Price Transmission for Major Dairy Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 285-292.
    15. Reagan, Patricia B. & Weitzman, Martin L., 1982. "Asymmetries in price and quantity adjustments by the competitive firm," Journal of Economic Theory, Elsevier, vol. 27(2), pages 410-420, August.
    16. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
    17. Listorti, Giulia & Esposti, Roberto, 2012. "Horizontal Price Transmission in Agricultural Markets: Fundamental Concepts and Open Empirical Issues," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 1(1), pages 1-28, April.
    18. Ian Sheldon & Richard Sperling, 2003. "Estimating the Extent of Imperfect Competition in the Food Industry: What Have We Learned?," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 89-109, March.
    19. Zoltán Bakucs & Jan Fałkowski & Imre Fertő, 2014. "Does Market Structure Influence Price Transmission in the Agro-food Sector? A Meta-analysis Perspective," Journal of Agricultural Economics, Wiley Blackwell, vol. 65(1), pages 1-25, January.
    20. Sam Peltzman, 2000. "Prices Rise Faster than They Fall," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 466-502, June.
    21. Luca Cacchiarelli & Daniel Lass & Alessandro Sorrentino, 2016. "CAP Reform and Price Transmission in the Italian Pasta Chain," Agribusiness, John Wiley & Sons, Ltd., vol. 32(4), pages 482-497, November.
    22. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    23. Azzeddine M. Azzam, 1999. "Asymmetry and Rigidity in Farm-Retail Price Transmission," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 525-533.
    24. Bettendorf, L & Verboven, F, 2000. "Incomplete Transmission of Coffee Bean Prices: Evidence from the Netherlands," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 27(1), pages 1-16, March.
    25. Varga, Tibor, 2007. "Vertical price transmission between market operators in Hungarian agricultural product chains," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 106, pages 1-30, July.
    26. Michael K. Wohlgenant, 1985. "Competitive Storage, Rational Expectations, and Short-Run Food Price Determination," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(4), pages 739-748.
    27. Sheldon Kimmel, 2009. "Why Prices Rise Faster than they Fall," EAG Discussions Papers 200904, Department of Justice, Antitrust Division.
    28. Kelvin Balcombe & Alastair Bailey & Jonathan Brooks, 2007. "Threshold Effects in Price Transmission: The Case of Brazilian Wheat, Maize, and Soya Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 308-323.
    29. Yuliya V. Bolotova & Andrew M. Novakovic, 2012. "The Impact of the New York State Milk Price Gouging Law on the Price Transmission Process and Supermarket Pricing Strategies in the Fluid Whole Milk Market," Agribusiness, John Wiley & Sons, Ltd., vol. 28(4), pages 377-399, September.
    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. Simone Severini & Alessandro Sorrentino, 2017. "Efficiency and coordination in the EU agri-food systems," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-5, December.
    2. Berger, Jurij & Brümmer, Bernhard & Fiankor, Dela-Dem & Kopp, Thomas, 2021. "Sugar market policies in the EU and international sugar trade," DARE Discussion Papers 2105, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).

    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. Rahman, Mohammad Chhiddikur, 2020. "Welfare Impact of Asymmetric Price Transmission on Bangladesh Rice Consumers," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 242248, June.
    2. Elena Claire Ricci & Massimo Peri & Lucia Baldi, 2019. "The Effects of Agricultural Price Instability on Vertical Price Transmission: A Study of the Wheat Chain in Italy," Agriculture, MDPI, vol. 9(2), pages 1-14, February.
    3. Rajcaniova, Miroslava & Pokrivcak, Jan, 2013. "Asymmetry in Price Transmission Mechanism: The Case of Slovak Potato Market," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 16(2), pages 1-8, September.
    4. Muhammed A. Usman & Mekbib G. Haile, 2017. "Producer to retailer price transmission in cereal markets of Ethiopia," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 9(4), pages 815-829, August.
    5. Yaya KEHO & Aïssata SOBIA CAMARA, 2012. "Vertical Price Transmission in Local Rice Markets in Côte d’Ivoire: Are Consumers Really Right?," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society, vol. 2(4), pages 552-564.
    6. Daniele Cavicchioli, 2018. "Detecting Market Power Along Food Supply Chains: Evidence and Methodological Insights from the Fluid Milk Sector in Italy," Agriculture, MDPI, vol. 8(12), pages 1-22, December.
    7. Antonioli, Federico & Santeramo, Fabio, 2017. "Vertical Price Transmission in Milk Supply Chain: Market Changes and Asymmetric Dynamics," 2017 Sixth AIEAA Conference, June 15-16, Piacenza, Italy 261256, Italian Association of Agricultural and Applied Economics (AIEAA).
    8. Lodovico Muratori, 2016. "Price Gap along the Ugandan Coffee Value Chain," Working Papers 1/16, Sapienza University of Rome, DISS.
    9. Rachel Rose & Dimitrios Paparas, 2023. "Price Transmission: The Case of the UK Dairy Market," Commodities, MDPI, vol. 2(1), pages 1-21, March.
    10. Rezitis, Anthony N. & Tsionas, Mike, 2019. "Modeling asymmetric price transmission in the European food market," Economic Modelling, Elsevier, vol. 76(C), pages 216-230.
    11. Tim Lloyd, 2017. "Forty Years of Price Transmission Research in the Food Industry: Insights, Challenges and Prospects," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 3-21, February.
    12. Fousekis, Panos & Katrakilidis, Constantinos & Trachanas, Emmanouil, 2016. "Vertical price transmission in the US beef sector: Evidence from the nonlinear ARDL model," Economic Modelling, Elsevier, vol. 52(PB), pages 499-506.
    13. Mohammad J Alam & Raghbendra Jha, 2016. "Asymmetric threshold vertical price transmission in wheat and flour markets in Dhaka (Bangladesh): seemingly unrelated regression analysis," ASARC Working Papers 2016-03, The Australian National University, Australia South Asia Research Centre.
    14. Drabik, Dušan & Ciaian, Pavel & Pokrivčák, Ján, 2016. "The effect of ethanol policies on the vertical price transmission in corn and food markets," Energy Economics, Elsevier, vol. 55(C), pages 189-199.
    15. Dariusz Kusz & Bożena Kusz & Paweł Hydzik, 2022. "Changes in the Price of Food and Agricultural Raw Materials in Poland in the Context of the European Union Accession," Sustainability, MDPI, vol. 14(8), pages 1-21, April.
    16. Daniele Cavicchioli & Luca Cacchiarelli & Alessandro Sorrentino & Roberto Pretolani, 2022. "Should We Cry over the Spilt Milk? Market Power and Structural Change along Dairy Supply Chains in EU Countries," Sustainability, MDPI, vol. 14(8), pages 1-18, April.
    17. Octavio Fernández Amador & Josef Baumgartner & Jesús Crespo Cuaresma, 2010. "Milking the Prices: The Role of Asymmetries in the Price Transmission Mechanism for Milk Products in Austria," WIFO Working Papers 378, WIFO.
    18. Daniele CAVICCHIOLI, 2013. "Detecting market power along food supply chains: evidence from the fluid milk sector in Italy," Departmental Working Papers 2013-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano, revised 30 Jan 2013.
    19. Michel Simioni & Frédéric Gonzales & Patrice Guillotreau & Laurent Le Grel, 2013. "Detecting Asymmetric Price Transmission with Consistent Threshold along the Fish Supply Chain," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 61(1), pages 37-60, March.
    20. Liang, Jing, 2010. "Three essays on food safety and foodborne illness," ISU General Staff Papers 201001010800002782, Iowa State University, Department of Economics.

    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:spr:agfoec:v:5:y:2017:i:1:d:10.1186_s40100-017-0087-8. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.