IDEAS home Printed from https://ideas.repec.org/a/ags/jordng/90687.html
   My bibliography  Save this article

Empirical Evidences from a Coffee Paradox: An Export Supply/Price Asymmetry Approach

Author

Listed:
  • Kang, Hyunsoo
  • Kennedy, P. Lynn

Abstract

This paper aims to determine the solidity of the notion of the "coffee paradox" using annual data from 1977 to 2007. In the confines of an export supply model, we analyze the effects of export coffee price on export volume. Price and profit equation are used to determine the effects of market power on export coffee price and measure changes in the retail and export price. We also estimate the elasticity of transmission and price asymmetry as a means of verifying the "coffee paradox." Ordinary Least Square (OLS), Instrumental Variables (IV), and simultaneous equation with Seemingly Unrelated Regressions (SUR) methods of econometric analysis are employed. Empirical results suggest that the world coffee market is characterized by "coffee paradox" due to different changes between retail and export prices of coffee, and that it is the existence of market power in importing countries that is the main contributor to the condition of price asymmetry.

Suggested Citation

  • Kang, Hyunsoo & Kennedy, P. Lynn, 2009. "Empirical Evidences from a Coffee Paradox: An Export Supply/Price Asymmetry Approach," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 32(3), pages 1-31, July.
  • Handle: RePEc:ags:jordng:90687
    DOI: 10.22004/ag.econ.90687
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/90687/files/323_06_Hyunsoo%20Kang_Empirical%20Evidences%20from%20a%20Coffee%20Paradox.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.90687?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LLC, vol. 3(1), pages 1-31, March.
    2. Morisset, Jacques, 1997. "Unfair trade? Empirical evidence in world commodity markets over te past 25 years," Policy Research Working Paper Series 1815, The World Bank.
    3. Mundlak, Yair & Larson, Donald F, 1992. "On the Transmission of World Agricultural Prices," The World Bank Economic Review, World Bank, vol. 6(3), pages 399-422, September.
    4. Larry S. Karp & Jeffrey M. Perloff, 1993. "A Dynamic Model of Oligopoly in the Coffee Export Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 448-457.
    5. Nathan S. Balke & Stephen P. A. Brown & Mine K. Yücel, 1998. "Crude oil and gasoline prices: an asymmetric relationship?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q 1, pages 2-11.
    6. Pierre Kohler, 2006. "The Economics of Fair Trade: For Whose Benefit? An Investigation into the Limits of Fair Trade as a Development Tool and the Risk of Clean-Washing," IHEID Working Papers 06-2007, Economics Section, The Graduate Institute of International Studies, revised Oct 2006.
    7. Krivonos, Ekaterina, 2004. "The impact of coffee market reforms on producer prices and price transmission," Policy Research Working Paper Series 3358, The World Bank.
    8. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    9. Henry W. Kinnucan & Olan D. Forker, 1987. "Asymmetry in Farm-Retail Price Transmission for Major Dairy Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 285-292.
    10. repec:cdl:agrebk:440237 is not listed on IDEAS
    11. Samarendu Mohanty & E. Wesley F. Peterson & Nancy Cottrell Kruse, 1995. "Price Asymmetry in the International Wheat Market," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 43(3), pages 355-366, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bin Qiu & Kuntal K. Das & W. Robert Reed, 2020. "The Effect of Exchange Rates on Chinese Trade: A Dual Margin Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(15), pages 3709-3731, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giliola Frey & Matteo Manera, 2007. "Econometric Models Of Asymmetric Price Transmission," Journal of Economic Surveys, Wiley Blackwell, vol. 21(2), pages 349-415, April.
    2. 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.
    3. Félix Badolo, 2012. "Chocs de prix internationaux et transmission : cas du marché du riz au Burkina Faso," L'Actualité Economique, Société Canadienne de Science Economique, vol. 88(3), pages 317-346.
    4. Subervie, Julie, 2011. "Producer price adjustment to commodity price shocks: An application of threshold cointegration," Economic Modelling, Elsevier, vol. 28(5), pages 2239-2246, September.
    5. Ilona Babenko & Benjamin Bennett & John M Bizjak & Jeffrey L Coles & Jason J Sandvik, 2023. "Clawback Provisions and Firm Risk," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 12(2), pages 191-239.
    6. Félix BADOLO, 2011. "Transmission des chocs de prix internationaux : le cas du riz au Burkina Faso," Working Papers 201129, CERDI.
    7. Jin Guo & Tetsuji Tanaka, 2019. "Determinants of international price volatility transmissions: the role of self-sufficiency rates in wheat-importing countries," Palgrave Communications, Palgrave Macmillan, vol. 5(1), pages 1-13, December.
    8. Manuela Jr., Wilfred S. & Friesen, Mark, 2025. "Determinants of car parking revenues: An econometric analysis of large European airports," Journal of Air Transport Management, Elsevier, vol. 122(C).
    9. Mohammad Jahangir Alam & Andrew M. McKenzie & Ismat Ara Begum & Jeroen Buysse & Eric J. Wailes & Guido Huylenbroeck, 2016. "Asymmetry Price Transmission in the Deregulated Rice Markets in Bangladesh: Asymmetric Error Correction Model," Agribusiness, John Wiley & Sons, Ltd., vol. 32(4), pages 498-511, November.
    10. Antony W. Dnes & Raymond Swaray, 2020. "Criminalizing price‐fixing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(8), pages 1417-1430, December.
    11. R Pickering & K Y Lim, 2024. "Does crime type matter in understanding the nexus between universal credit and crime? Evidence from England and Wales," Economic Issues Journal Articles, Economic Issues, vol. 29(1), pages 93-131, March.
    12. Ekaterina Krivonos & Marcelo Olarreaga, 2009. "Sugar Prices, Labor Income, and Poverty in Brazil," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 95-128.
    13. Li, Xi-Le & Saghaian, Sayed, 2014. "The Presence Of Market Power In The Coffee Market: The Case Of Colombian Milds," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170348, Agricultural and Applied Economics Association.
    14. Pawlowski, Tim & Downward, Paul & Rasciute, Simona, 2014. "Does national pride from international sporting success contribute to well-being? An international investigation," Sport Management Review, Elsevier, vol. 17(2), pages 121-132.
    15. Capps, Oral, Jr. & Sherwell, Pablo, 2005. "Spatial Asymmetry in Farm-Retail Price Transmission Associated with Fluid Milk Products," 2005 Annual meeting, July 24-27, Providence, RI 19316, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Oral Capps & Pablo Sherwell, 2007. "Alternative approaches in detecting asymmetry in farm-retail price transmission of fluid milk," Agribusiness, John Wiley & Sons, Ltd., vol. 23(3), pages 313-331.
    17. Ligane Massamba Séne & Ousmane Badiane, 2016. "Out-of-pocket health payments: a catalyst for agricultural productivity growth, but with potentially impoverishing effects in Senegal," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(1), pages 29-49, June.
    18. Liu, Yang & Dong, Kangyin & Nepal, Rabindra & Afi, Hatem, 2025. "How do climate risks affect corporate ESG performance? Micro evidence from China," Research in International Business and Finance, Elsevier, vol. 76(C).
    19. Jin Guo & Tetsuji Tanaka, 2020. "Examining the determinants of global and local price passthrough in cereal markets: evidence from DCC-GJR-GARCH and panel analyses," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 8(1), pages 1-22, December.
    20. Higgins, Matthew J. & Young, Andrew T. & Levy, Daniel, 2009. "Federal, State, and Local Governments: Evaluating Their Separate Roles in US Growth," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 139(3-4), pages 493-507.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:jordng:90687. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/kreinkr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.