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Spatial Asymmetry in Farm-Retail Price Transmission Associated with Fluid Milk Products

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  • Capps, Oral, Jr.
  • Sherwell, Pablo

Abstract

Testing for asymmetric price transmission and calculating elasticities of price transmission are of great importance in applied economics. We analyze the behavior of tests for asymmetry according to the conventional Houck approach and to the von Cramon-Taubadel and Loy error correction model (ECM) approach. We also estimate the short-run and long-run elasticities of price transmission between the farm and retail levels of the marketing channel for whole milk and two-percent milk for seven U.S. cities by model. We employ monthly data over the period from January 1994 to October 2002. Empirical results suggest that the farm-retail price transmission process for milk is asymmetric. Price transmission elasticities in conjunction with rising farm prices generally are larger than corresponding elasticities associated with falling farm prices.

Suggested Citation

  • Capps, Oral, Jr. & Sherwell, Pablo, 2005. "Spatial Asymmetry in Farm-Retail Price Transmission Associated with Fluid Milk Products," 2005 Annual meeting, July 24-27, Providence, RI 19316, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19316
    DOI: 10.22004/ag.econ.19316
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    3. Weber, Sascha A. & Salamon, Petra & Hansen, Heiko, 2012. "Volatile world market prices for dairy products - how do they affect domestic price formation: The German cheese market," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122542, European Association of Agricultural Economists.
    4. Bathla, Seema & Srinivasulu, R., 2011. "Price Transmission and Asymmetry: An Empirical Analysis of Indian Groundnut Seed and Oil Markets," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 66(4), pages 1-16.
    5. Hosseini, Seyed Safdar & Nikoukar, Afsaneh & Dourandish, Arash, 2012. "Price Transmission Analysis in Iran Chicken Market," International Journal of Agricultural Management and Development (IJAMAD), Iranian Association of Agricultural Economics, vol. 2(4).

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