INTERMEDIARIES AND ASYMMETRIC PRICING. EVIDENCE FROM THE MARKET OF LOCAL MILLET IN MALI

Alou Dembele, Ahmet Özçelik, Ernest Ouedraogo and Lamissa Diakite

Review of Agricultural and Applied Economics (RAAE), 2020, vol. 23, issue 01

Abstract: Commodity prices consistently increase in developing countries while they barely decline, affecting negatively poor and vulnerable people. This paper examines the role of intermediaries such as collectors, wholesalers, and retailers in the asymmetric transmission of millet prices from producers to consumers in local millet markets in Mali. We use data of local millet prices from the five most important cities in terms of local millet production in Mali namely; Bamako, Segou, Kayes, Koulikoro and Sikasso. Using the Threshold Auto-Regressive (TAR) method developed by Enders and Siklos (2001), at the exogenous threshold, we found an asymmetrical transmission between Koulikoro and Ségou collectors’ market. The result shows that, collectors in Koulikoro promptly transmit price increases while they lately transmit price decline at exogenous threshold. Strong evidence was found to suggest that, collectors in Koulikoro and wholesalers in Sikasso punctually transmit a decrease in millet prices to consumers while they tardily transmit the increase in prices to consumers even though the effect of prices increment are relatively larger than the effect of price decrease at endogenous threshold. By applying a zero exogenous threshold we found a non-asymmetric cointegration between Kayes and Ségou, Sikasso and Ségou ‘collectors market and between Sikasso and Ségou wholesalers’ market. Regardless of the threshold chosen in retailers market, we found symmetric prices transmissions between all the markets pairs. In order to reduce this asymmetric price transmission and to fight against poverty, the authors suggest that decision-makers should consider introducing millet price control in the local markets, especially when millet prices increase spontaneously.

Keywords: Agribusiness; Agricultural and Food Policy; Consumer/Household Economics; Food Consumption/Nutrition/Food Safety; Food Security and Poverty (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ags:roaaec:308386

DOI: 10.22004/ag.econ.308386

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