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Implications of the 2006 E. coli outbreak on spatial price transmission in the U.S. fresh spinach market

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  • Samantha L. Durborow
  • Chanjin Chung
  • Seon‐woong Kim

Abstract

A regime switching error correction model is applied to weekly shipping point and terminal market spinach prices in order to assess the spatial price transmission impact of the 2006 E. coli outbreak on the U.S. fresh spinach market. A food safety index (FSI) related to the outbreak is calculated and used as the regime switching mechanism for 11 alternative farm‐to‐wholesale spatially separated market pairs. Results suggest not all markets responded uniformly to the FSI. The majority of the markets with alternative sources of spinach exhibited nonlinearities, whereas those which were primarily supplied by California producers did not. In general, shorter adjustment speeds were seen in terminal markets that were closer in proximity to the California shipping point. Southern market pairs exhibiting threshold behavior saw increased efficiency after the outbreak (potentially due to increased self‐regulation), whereas the remaining pairs saw a loss in efficiency. [EconLit citations: C32, Q11].

Suggested Citation

  • Samantha L. Durborow & Chanjin Chung & Seon‐woong Kim, 2017. "Implications of the 2006 E. coli outbreak on spatial price transmission in the U.S. fresh spinach market," Agribusiness, John Wiley & Sons, Ltd., vol. 33(4), pages 475-492, September.
    • Handle: RePEc:wly:agribz:v:33:y:2017:i:4:p:475-492
    DOI: 10.1002/agr.21497
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