Impact of the livestock mandatory reporting act on the vertical price transmission within the beef supply chain

Chanjin Chung, Johnna Rushin and Prasanna Surathkal

Agribusiness, 2018, vol. 34, issue 3, 562-578

Abstract: This study examines the characteristics of price transmission along the vertical linkage in the beef industry before and after the implementation of the Mandatory Price Reporting Act (MPR) using econometric procedures such as the Gregory–Hansen structural break test, threshold autoregressive model, threshold error correction model, and nonlinear impulse response functions. Results show the improved speed of price adjustment after the MPR in the supply chain of the beef industry, whereas a limited evidence of the increased price asymmetry is detected. The increased asymmetry is observed mostly through the long‐run regime switching coefficients of threshold autoregressive and error correction models. The price asymmetry mostly disappears in both pre‐ and post‐MPR periods when only short‐ and long‐run price adjustment coefficients are considered. The results also suggest the existence of the threshold cointegration in the vertical price relationship of the beef industry, which supports the use of the nonlinear threshold model in this study.[JEL codes: C22, Q11]

Date: 2018
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https://doi.org/10.1002/agr.21546

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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:34:y:2018:i:3:p:562-578

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