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Distance and Border Effects on Price Transmission: A Meta-analysis

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  • Carolin Kouyaté
  • Stephan Cramon-Taubadel

Abstract

In a meta-analysis of spatial price transmission (PT) literature we aim to test for the presence of distance and border effects on price transmission. We use PT estimates for 1189 cereal market pairs extracted from 57 studies and seek to explain them by airline distance and existence of a border. The findings indicate distance and border effects on both price cointegration and price transmission. A border separating two markets reduces the probability of cointegration of price series by 23% compared with markets located in the same country. 1000 kilometers of distance reduces the probability of cointegration by 7%. The speed of price adjustment is on average 13% slower in international than in intra-national market pairs. 1000 kilometers of distance within a country on average yields 6-20% slower price adjustment. Distance effects become negligible and economically insignificant for international market pairs. Maize price pairs are less often cointegrated compared to rice prices and cointegration is most prevalent for barley. Price transmission is slowest in wheat markets. In peer reviewed studies cointegration is more prevalent and price transmission is faster. However the explanation need not be a publication bias but can also result from higher quality methodologies. Moreover, we identify a set of model specifications that significantly affect price transmission estimates. The study contributes to the literature by presenting a first meta-analysis of spatial PT literature and providing insights into distance and border effects on price transmission.
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  • Carolin Kouyaté & Stephan Cramon-Taubadel, 2016. "Distance and Border Effects on Price Transmission: A Meta-analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(2), pages 255-271, June.
  • Handle: RePEc:bla:jageco:v:67:y:2016:i:2:p:255-271
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    File URL: http://hdl.handle.net/10.1111/1477-9552.12145
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    7. Stephan von Cramon-Taubadel, 2017. "The analysis of market integration and price transmission – results and implications in an African context," Agrekon, Taylor & Francis Journals, vol. 56(2), pages 83-96, April.
    8. Neubauer, Florian & Wall, Alan & Njuki, Eric & Bravo-Ureta, Boris, 2023. "Climatic Effects and Farming Performance: An Overview of Selected Studies," 2023 Inter-Conference Symposium, April 19-21, 2023, Montevideo, Uruguay 338540, International Association of Agricultural Economists.
    9. Bakucs, Zoltan & Ferto, Imre & Benedeka, Zsofia & Molnar, Adrienn, 2015. "Determinants of Horizontal Milk Producer Price Integration," 2015 Conference, August 9-14, 2015, Milan, Italy 212042, International Association of Agricultural Economists.
    10. Antonioli, Federico & Santeramo, Fabio, 2017. "Vertical Price Transmission in Milk Supply Chain: Market Changes and Asymmetric Dynamics," 2017 Sixth AIEAA Conference, June 15-16, Piacenza, Italy 261256, Italian Association of Agricultural and Applied Economics (AIEAA).
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    13. Dariusz Kusz & Bożena Kusz & Paweł Hydzik, 2022. "Changes in the Price of Food and Agricultural Raw Materials in Poland in the Context of the European Union Accession," Sustainability, MDPI, vol. 14(8), pages 1-21, April.
    14. Tetsuji Tanaka & Jin Guo, 2020. "International price volatility transmission and structural change: a market connectivity analysis in the beef sector," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-13, December.
    15. Luca Cattivelli & Federico Antonioli, 2023. "When cointegration is interrupted: Price transmission analysis in the Italian dairy‐feed industry," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 744-761, July.
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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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