Market power and farm‐retail price transmission: The case of US fluid milk markets

Charng‐Jiun Yu and Brian W. Gould

Agribusiness, 2019, vol. 35, issue 4, 537-555

Abstract: In this paper, we seek to understand the impact of market competitiveness on the degree of asymmetric price transmission and associated welfare implications. We estimate a kinked Almost Ideal Demand System for fluid milk products in 18 US metropolitan areas. By conducting an asymmetric price transmission test, we find that cities with less competitive food retailing tend to exhibit asymmetric price transmission. The degree of price asymmetry and associated welfare loss are decreasing in market competitiveness. Our welfare analysis suggests that the welfare loss due to asymmetric price transmission is large in terms of the percentage of milk expenditures. The potential is for substantially higher future welfare loss given the ongoing consolidation in the food retailing industry. [EconLit citations: L11, Q11]

Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1002/agr.21606

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:35:y:2019:i:4:p:537-555

Access Statistics for this article

Agribusiness is currently edited by Ronald W. Cotterill

More articles in Agribusiness from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().