EconPapers    
Economics at your fingertips  
 

ASYMMETRIC PRICE ADJUSTMENTS AND BEHAVIOR UNDER RISK: EVIDENCE FROM PERUVIAN AGRICULTURAL MARKETS

Jorge Agüero

No 20394, 2004 Annual meeting, August 1-4, Denver, CO from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Most studies measuring asymmetric adjustments in vertical price transmissions fail to provide empirical support to explain such behavior. The literature invokes theoretical models, which derive asymmetric behavior based on variables that are difficult to measure such as oligopolies' coordination policies, market imperfections or menu costs. Therefore, with no empirical support explaining the asymmetries, these studies leave no room for policy implementation. In this paper I relate asymmetric price responses to a theory of behavior under risk driven by the perishable rate of the goods. Retailers of a perishable good facing an increment in the wholesale price may decide not to increase their prices for fear of being left with a spoiled product. Using three agricultural products with different perishable rates I reject the null hypothesis of symmetric adjustments in the most perishable product but fail to reject for the less perishable goods. The nonlinear responses are consistent with the prediction of the model. The test for asymmetries uses a threshold cointegration technique where the threshold level and the cointegration vector are estimated from the data instead of being imposed by the econometrician.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Pages: 22
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://ageconsearch.umn.edu/record/20394/files/sp04ag01.pdf (application/pdf)

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:ags:aaea04:20394

DOI: 10.22004/ag.econ.20394

Access Statistics for this paper

More papers in 2004 Annual meeting, August 1-4, Denver, CO from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().

 
Page updated 2020-09-08
Handle: RePEc:ags:aaea04:20394