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Marketing and pricing dynamics in the presence of structural breaks - the Hungarian pork market

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  • Bakucs, Lajos Zoltan
  • Ferto, Imre

Abstract

The study of marketing margins and price transmission on various commodity markets has been a popular research topic of the past decades (see MEYER, VON CRAMONTAUBADEL, 2004, for a recent survey), however with a few exceptions these studies focused on developed economies. In this paper we examine the above phenomena on the: Hungarian pork market. The Johansen (maximum likelihood) or Engle and Granger (two step) cointegration tests do not reject the no-cointegration null hypothesis between the Hungarian pork producer and retail price series. Therefore we apply the Gregory and Hansen procedure with recursively estimated breakpoints and ADF statistics, and found that the prices are cointegrated with a structural break occurring in April 1996. Exogeneity tests reveal the causality running from producer to retail prices both on long and short run. Homogeneity tests are rejected, suggesting a mark-up pricing strategy. Price transmission modelling suggests that, price transmission on the Hungarian pork meat market is symmetric on the long, but asymmetric on the short-run, i.e. processors, wholesalers or retailers might take temporary advantage should price changes occur.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece with number 10031.

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Date of creation: 2006
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Handle: RePEc:ags:eaae98:10031

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Related research

Keywords: price transmission; marketing margin; pricing; structural breaks; Hungarian pork market; Demand and Price Analysis; Marketing;

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Cited by:
  1. Clark, J. Stephen & Cechura, Lukas & Berhanu, Adugna, 2011. "BSE Disease Outbreaks, Structural Change and Market Power in the Canadian Beef Industry," Working Papers 114097, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
  2. Bakucs, Lajos Zoltan & Falkowski, Jan & Ferto, Imre, 2012. "What causes asymmetric price transmission in agro-food sector? Meta-analysis perspective," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134765, Agricultural Economics Society.

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