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Asymmetric Price Transmission in the Artisan Dairy Industry of Honduras

Author

Listed:
  • Jorge Fidel BARAHONA
  • Bernardo TREJOS
  • Jai Wei LEE
  • Wanvilai CHULAPHAN
  • Chalermpon JATUPORN

Abstract

This study investigates price transmission symmetry in the artisan dairy industry of Honduras. The data employed includes monthly prices of fluid milk, quesillo (i.e., a local cheese product with a consistency similar to mozzarella), fresh cheese, and dry cheese between January 1997 and April 2013. Both the Johansen multivariate approach and the Engle-Granger two step analyses confirm that fluid milk prices have a strong cointegration with prices of quesillo, fresh cheese and dry cheese. Furthermore, dairy products that exhibit high market competition such as fresh cheese and dry cheese showed negative asymmetric price transmission whereas those that exhibit low market competition such as quesillo showed positive asymmetric price transmission. Results also suggest that, regardless of the type of dairy product, artisan dairy producers will adjust more quickly when milk prices increase than when they decrease. Artisan dairy producers operate under low profit margins, so they will react faster when their profits shrink and slower when their profit margins increase.

Suggested Citation

  • Jorge Fidel BARAHONA & Bernardo TREJOS & Jai Wei LEE & Wanvilai CHULAPHAN & Chalermpon JATUPORN, 2013. "Asymmetric Price Transmission in the Artisan Dairy Industry of Honduras," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 3(7), pages 851-859.
    • Handle: RePEc:asi:ajoerj:v:3:y:2013:i:7:p:851-859:id:3498
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