Price Dynamics in a Vertical Sector: The Case of Butter
AbstractWe develop a reduced-form model of price transmission in a vertical sector, allowing for refined asymetric, contemporaneous and lagged, own and cross price effects. The model is used to analyze wholesale-retail price dynamics in the US butter market. The analysis provides strong evidence of asymmetric price transmissions. It documents the complex nature of nonlinear price dynamics in a vertical sector and its implications for the distribution of future prices. It finds evidence that the asymmetric response to shocks is stronger in the sort run for retail prices, and in the longer run for wholesale prices.
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Bibliographic InfoPaper provided by University of Wisconsin, Agricultural and Applied Economics in its series Staff Paper Series with number 452.
Date of creation: Aug 2002
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- Jean-Paul Chavas & Aashish Mehta, 2004. "Price Dynamics in a Vertical Sector: The Case of Butter," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1078-1093.
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