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ASYMMETRIC PRICE TRANSMISSION IN THE ISRAELI CITRUS EXPORT SECTOR IN THE AFTERMATH OF LIBERALIZATION

Linde Goetz and Stephan von Cramon-Taubadel
Authors registered in the RePEc Author Service: Linde Götz (goetz@iamo.de)

No 7594, 47th Annual Conference, Weihenstephan, Germany, September 26-28, 2007 from German Association of Agricultural Economists (GEWISOLA)

Abstract: The Israeli citrus export sector was liberalized in 1991 with the aim to increase citrus growers' income and to improve overall efficiency of the international citrus marketing channel. However, the former government export monopoly's activities were mainly taken over by four large companies accounting for over 90% of total Israeli citrus market exports. In addition, citrus exporters maintained the monopoly's consignment system, substantially limiting transparency on how the grower price is determined. This lead the government to intervene in the newly liberalized market by implementing a minimum price agreement in the 1994/95 season to protect citrus growers against exporters' abuse of market power. In this paper we analyze whether market power was exerted by exporting companies over citrus growers in the form of asymmetric price transmission. Our study is unique in that it investigates vertical price transmission across international borders, i.e. in the context of Israeli grapefruit exports to France. We explicitly account for possible changes in exporters' pricing behaviour in the post-liberalization period. We apply an error correction model (ECM) to disaggregated firm-level Israeli grower price and French import price data. An ECM is estimated individually for each of the major exporting companies within a seemingly unrelated regression (SUR) framework. We find asymmetric price transmission in the first years after liberalisation, but symmetry in the second half of the 1990s. Our results indicate that growers' losses due to asymmetry amounted to as much as 2.5% of their total revenues. Our results suggest that liberalization improved the efficiency of the Israeli citrus international marketing channel, but that this took time and was probably accelerated by government intervention.

Keywords: Crop Production/Industries; International Relations/Trade (search for similar items in EconPapers)
Pages: 17
Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Asymmetric Price Transmission in the Israeli Citrus Export Sector in the Aftermath of Liberalization (2008) Downloads
Working Paper: Asymmetric Price Transmission in the Israeli Citrus Export Sector in the Aftermath of Liberalization (2007) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:gewi07:7594

DOI: 10.22004/ag.econ.7594

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