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Price transmission and market power in a transition context: evidence from the Polish fluid milk sector

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  • Jan Fałkowski

Abstract

Profound changes have been taking place in the Polish dairy sector since the beginning of transition. Two distinct features have attracted particular attention, namely growing consolidation of the downstream industries and serious farm fragmentation. Consequently, in the debate numerous concerns have been expressed that the sector's restructuring has been proceeding, so to speak, at farmers' expense. Most frequently farmers' relatively weak bargaining position, compared with that of processors and retailers, has been blamed for this state of affairs. Up to now, however, no convincing evidence has been provided that these arguments really hold. This article aims at verifying the above view by examining the mechanism of price transmission. To put the problem in a theoretically consistent, structural equation setting, an approach using exogenous demand and supply shifters is followed. The analysis is couched in a vector error correction model framework. The results suggest that price transmission between farm and retail levels is affected by both short-run and long-run asymmetries. Moreover, behaviour of prices in the fluid milk sector in Poland is consistent with the use of market power by the downstream sector.

Suggested Citation

  • Jan Fałkowski, 2010. "Price transmission and market power in a transition context: evidence from the Polish fluid milk sector," Post-Communist Economies, Taylor & Francis Journals, vol. 22(4), pages 513-529.
    • Handle: RePEc:taf:pocoec:v:22:y:2010:i:4:p:513-529
    DOI: 10.1080/14631377.2010.518477
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    References listed on IDEAS

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    1. Helmut Lütkepohl, 2005. "New Introduction to Multiple Time Series Analysis," Springer Books, Springer, number 978-3-540-27752-1, January.
    2. Yakhshilikov, Yorbol & Brosig, Stephan, 2006. "Spatial Price Transmission in Kazakh Wheat Markets," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25690, International Association of Agricultural Economists.
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    1. Bairagi, S. & Mohanty, S., 2018. "Analysis of Price Transmission along the Cambodian Rice Value Chain," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277022, International Association of Agricultural Economists.
    2. Pierluigi Montalbano & Rebecca Pietrelli & Luca Salvatici, 2017. "Market chain participation and food security: the case of the Ugandan maize farmers," Working Papers 2/17, Sapienza University of Rome, DISS.
    3. Kharin, S., 2018. "Price Transmission Analysis: the Case of Milk Products in Russia," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 10(01).
    4. Elena Claire Ricci & Massimo Peri & Lucia Baldi, 2019. "The Effects of Agricultural Price Instability on Vertical Price Transmission: A Study of the Wheat Chain in Italy," Agriculture, MDPI, vol. 9(2), pages 1-14, February.
    5. 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, July.

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