Price Transmission in Vertical Dairy Chains: The Italian Case

Robert Weaver, F. Rosa and M. Vasciaveo

No 206241, 2015 International European Forum (144th EAAE Seminar), February 9-13, 2015, Innsbruck-Igls, Austria from International European Forum on System Dynamics and Innovation in Food Networks

Abstract: a theoretic level, price transmission does not provide a clear signal of competitiveness as many conditions may induce stickiness and even asymmetry in the speed of adjustment to positive and negative changes. While evidence from past EU studies for the dairy sector is mixed, several studies have found evidence of asymmetry in particular countries. However, none to our knowledge have considered evidence for Italy. We examine price dynamics within the chain and test for presence of asymmetry in the transmission of price changes along the chain. Using a parametric test of asymmetry in a multivariate VECM, we find strong evidence of symmetry in co-movement. To explore whether these results are robust with respect to nonlinearity we estimate threshold VECM models and also find strong evidence to reject asymmetry except for the transmission between raw milk and wholesale butter prices. While inference with respect to competitiveness of markets cannot be inferred from evidence of asymmetry, findings of symmetry confirm that the market organization and performance is not controlling price change to be asymmetric.

Keywords: Agribusiness (search for similar items in EconPapers)
Pages: 1
Date: 2015-05
New Economics Papers: this item is included in nep-com and nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iefi15:206241

DOI: 10.22004/ag.econ.206241

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