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A note on the correspondence between horizontal and vertical price transmission

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  • Henry W. Kinnucan

Abstract

Horizontal (vertical) elasticities of price transmission in a competitive market can be positive or negative in sign depending on whether observed changes in market prices are triggered by shifts in the supply or demand for the commodity or by changes in trade (marketing) costs. These facts suggest estimates of horizontal (vertical) elasticities of price transmission obtained from empirical models that exclude trade (marketing) costs will suffer from attenuation bias. The attenuation bias is apt to cause inferences about market efficiency to be more pessimistic than is warranted.

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  • Henry W. Kinnucan, 2022. "A note on the correspondence between horizontal and vertical price transmission," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(3), pages 654-665, September.
    • Handle: RePEc:bla:jageco:v:73:y:2022:i:3:p:654-665
    DOI: 10.1111/1477-9552.12483
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    References listed on IDEAS

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    Cited by:

    1. Yali Mu & Stephan von Cramon‐Taubadel, 2022. "Estimating dynamic market efficiency frontiers," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(3), pages 633-653, September.

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