Market Integration and Price Transmission in the Vertical Supply Chain of Rice: An Evidence from Bangladesh

Limon Deb, Yoonsuk Lee and Sang Hyeon Lee ()
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Limon Deb: Agricultural Economics Division, Bangladesh Rice Research Institute, Gazipur 1701, Bangladesh
Yoonsuk Lee: Department of Agricultural & Resource Economics, Kangwon National University, Chuncheon 24341, Korea

Agriculture, 2020, vol. 10, issue 7, 1-21

Abstract: As a staple food, rice has an enormous market in Bangladesh in terms of market participants and the volume of the product. As the price of rice is always a sensitive factor for producers, poor consumers and policy makers, this paper investigates market integration and price transmission along the vertical supply chain of rice. Johansen’s test of co-integration confirmed that farm, wholesale and retail prices are co-integrated in the long-run. A causality test revealed that prices were found to be at wholesale levels for both the upstream and downstream markets. The asymmetry error correction model (ECM) has discovered short-run and long-run asymmetry in price transmission in the vertical supply chain where both producers and consumers were being affected due to positive and negative asymmetry. Threshold autoregressive (TAR) and momentum threshold autoregressive (M-TAR) models have confirmed threshold co-integration as well as threshold effect on asymmetry in price transmission. The results highlight the inevitability of policy implementations and increased public interventions to reduce asymmetry for engendering greater pricing efficiency in Bangladesh rice markets.

Keywords: time-series; price transmission; co-integration; causality; error correction; threshold autoregressive (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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