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Explaining Price Transmission Asymmetry In The Us Peanut Marketing Chain

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  • Revoredo-Giha, Cesar
  • Nadolnyak, Denis A.
  • Fletcher, Stanley M.

Abstract

n the paper, we study price transmission from wholesale peanut prices to retail peanut butter prices. Using monthly data since 1984, we show that, while an increase in peanut prices is almost immediately transferred to peanut butter prices, it takes several months for a price decrease to be reflected in the peanut butter prices. Besides, the long term price transmission effect also appears to be symmetric. The observed short and long-term asymmetry is explained as a result of profit maximizing inventory management and/or some degree of market power in peanut processing.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2004 Annual meeting, August 1-4, Denver, CO with number 20363.

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Date of creation: 2004
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Handle: RePEc:ags:aaea04:20363

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Keywords: Marketing;

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  1. Severin Borenstein & A. Colin Cameron, 1992. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," NBER Working Papers 4138, National Bureau of Economic Research, Inc.
  2. Anderson, Simon P. & de Palma, Andre & Kreider, Brent, 2001. "Tax incidence in differentiated product oligopoly," Journal of Public Economics, Elsevier, vol. 81(2), pages 173-192, August.
  3. Enders, Walter & Granger, C. W. J., 1998. "Unit Root Tests and Asymmetric Adjustment with an Example Using the Term Structure of Interest Rates," Staff General Research Papers 1388, Iowa State University, Department of Economics.
  4. Phlips, Louis, 1980. "Intertemporal Price Discrimination and Sticky Prices," The Quarterly Journal of Economics, MIT Press, vol. 94(3), pages 525-42, May.
  5. Steve McCorriston & Ian M. Sheldon, 1997. "Vertical restraints and competition policy in the US and UK food marketing systems," Agribusiness, John Wiley & Sons, Ltd., vol. 13(2), pages 237-252.
  6. Jochen Meyer & Stephan Cramon-Taubadel, 2004. "Asymmetric Price Transmission: A Survey," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(3), pages 581-611.
  7. Kai-Uwe Kuhn, 1997. "Nonlinear Pricing in Vertically Related Duopolies," RAND Journal of Economics, The RAND Corporation, vol. 28(1), pages 37-62, Spring.
  8. Sam Peltzman, 2000. "Prices Rise Faster than They Fall," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 466-502, June.
  9. Dobson, Paul W & Waterson, Michael, 1997. "Countervailing Power and Consumer Prices," Economic Journal, Royal Economic Society, vol. 107(441), pages 418-30, March.
  10. Goodwin, Barry K. & Harper, Daniel C., 2000. "Price Transmission, Threshold Behavior, And Asymmetric Adjustment In The U.S. Pork Sector," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(03), December.
  11. Zabel, Edward, 1972. "Multiperiod monopoly under uncertainty," Journal of Economic Theory, Elsevier, vol. 5(3), pages 524-536, December.
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