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Asymmetric price transmission in food markets in the highlands of central Kenya

Author

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  • Ngare, Lucy W
  • Wambugu, Stephen K
  • Nzuma, Jonathan M.
  • Shisanya, Chris

Abstract

This paper investigates the non-linear adjustments between maize and beans markets in the highlands of central Kenya. Results are based on bi-weekly retail price data collected from ten markets in Mbeere and Meru south districts. The error correction model extended by the incorporation of asymmetric adjustment terms was used to study asymmetry in price transmission between the markets. Cointegration technique was used to determine the existence of a long-run price relationship between the maize and beans markets. The findings indicate that the markets are integrated. Retail price transmission process between the markets is asymmetric. The observed prices adjust more rapidly to increases in prices than to decreases. The speed of price response between market pairs was higher for markets that are far apart.

Suggested Citation

  • Ngare, Lucy W & Wambugu, Stephen K & Nzuma, Jonathan M. & Shisanya, Chris, 2012. "Asymmetric price transmission in food markets in the highlands of central Kenya," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161448, African Association of Agricultural Economists (AAAE).
    • Handle: RePEc:ags:aaae13:161448
    DOI: 10.22004/ag.econ.161448
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    References listed on IDEAS

    as
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