IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Vertical integration and non-linear price adjustments: The Spanish poultry sector

  • Monia Ben-Kaabia

    (Department of Economic Analysis, University of Zaragoza, Spain)

  • José M. Gil

    (CREDA-UPC-IRTA, Department of Agrofood Engineering and Biotechnology, Polytechnic University of Catalonia, Barcelona, Spain)

  • Mehrez Ameur

    (CREDA-UPC-IRTA, Department of Agrofood Engineering and Biotechnology, Polytechnic University of Catalonia, Barcelona, Spain)

Registered author(s):

    The analysis of asymmetries in the price-transmission mechanism at different levels of the marketing chain provides a good indicator of market efficiency in vertically related markets. The objective of this paper is to investigate the non-linear adjustments of prices in the poultry marketing chain in Spain. The methodology used is based on the multivariate approach to specify and estimate a threshold autoregressive model. Price relationships at feed industry, producer, and retail levels are considered. Results indicate that, in the long run, price transmission is perfect and any supply or demand shocks are fully transmitted to all prices in the system. In the short run, price adjustments between the feed and the farmer levels are fairly symmetric and are representative of a cost-push transmission mechanism. On the other hand, retailers benefit from any shock, whether positive or negative, that affects supply or demand conditions when price spreads are increasing, while price behavior is closely related to competitive markets when faced with declining price spreads. [EconLit citations: C320, Q130.] © 2005 Wiley Periodicals, Inc. Agribusiness 21: 253-271, 2005.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    File Function: Link to full text; subscription required
    Download Restriction: no

    Article provided by John Wiley & Sons, Ltd. in its journal Agribusiness.

    Volume (Year): 21 (2005)
    Issue (Month): 2 ()
    Pages: 253-271

    in new window

    Handle: RePEc:wly:agribz:v:21:y:2005:i:2:p:253-271
    Contact details of provider: Web page:

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Reagan, Patricia B. & Weitzman, Martin L., 1982. "Asymmetries in price and quantity adjustments by the competitive firm," Journal of Economic Theory, Elsevier, vol. 27(2), pages 410-420, August.
    2. Azzeddine M. Azzam, 1999. "Asymmetry and Rigidity in Farm-Retail Price Transmission," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 525-533.
    3. Robert A. Buckle & John A. Carlson, 2000. "Inflation and Asymmetric Price Adjustment," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 157-160, February.
    4. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, December.
    5. Alan M. Taylor, 2000. "Potential Pitfalls for the Purchasing-Power-Parity Puzzle? Sampling and Specification Biases in Mean-Reversion Tests of the Law of One Price," NBER Working Papers 7577, National Bureau of Economic Research, Inc.
    6. Escribano, Álvaro & Mira, Santiago, 1996. "Nonlinear cointegration and nonlinear error correction," DES - Working Papers. Statistics and Econometrics. WS 4546, Universidad Carlos III de Madrid. Departamento de Estadística.
    7. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    8. Simon M. Potter, 1993. "A Nonlinear Approach to U.S. GNP," UCLA Economics Working Papers 693, UCLA Department of Economics.
    9. Bent Nielsen, 2000. "Cointegration Analysis in the Presence of Structural Breaks in the Deterministic Trend," Econometric Society World Congress 2000 Contributed Papers 1494, Econometric Society.
    10. Chavas, Jean- Paul & Mehta, Aashish, 2002. "Price Dynamics in a Vertical Sector: The Case of Butter," Working Papers 201555, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    11. Barry K. Goodwin & Matthew T. Holt, 1999. "Price Transmission and Asymmetric Adjustment in the U.S. Beef Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 630-637.
    12. Severin Borenstein & A. Colin Cameron & Richard Gilbert, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 305-339.
    13. Lo, Ming Chien & Zivot, Eric, 2001. "Threshold Cointegration And Nonlinear Adjustment To The Law Of One Price," Macroeconomic Dynamics, Cambridge University Press, vol. 5(04), pages 533-576, September.
    14. Milton S. Boyd & B. Wade Brorsen, 1988. "Price Asymmetry in the U.S. Pork Marketing Channel," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 10(1), pages 103-109.
    15. Barry K. Goodwin & Nicholas E. Piggott, 2001. "Spatial Market Integration in the Presence of Threshold Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(2), pages 302-317.
    16. Griffith, G. R. & Piggott, N. E., 1994. "Asymmetry in beef, lamb and pork farm-retail price transmission in Australia," Agricultural Economics, Blackwell, vol. 10(3), pages 307-316, May.
    17. Sam Peltzman, 2000. "Prices Rise Faster than They Fall," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 466-502, June.
    18. Koop, Gary & Pesaran, M. Hashem & Potter, Simon M., 1996. "Impulse response analysis in nonlinear multivariate models," Journal of Econometrics, Elsevier, vol. 74(1), pages 119-147, September.
    19. S McCorriston & CW Morgan & AJ Rayner, 2001. "Price transmission: the interaction between market power and returns to scale," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 28(2), pages 143-159, June.
    20. Anindya Banerjee & Robin L. Lumsdaine & James H. Stock, 1990. "Recursive and Sequential Tests of the Unit Root and Trend Break Hypothesis: Theory and International Evidence," NBER Working Papers 3510, National Bureau of Economic Research, Inc.
    21. Richard Tiffin & P. J. Dawson, 2000. "Structural breaks, cointegration and the farm-retail price spread for lamb," Applied Economics, Taylor & Francis Journals, vol. 32(10), pages 1281-1286.
    22. Hansen, Bruce E, 1999. " Testing for Linearity," Journal of Economic Surveys, Wiley Blackwell, vol. 13(5), pages 551-76, December.
    23. Hansen, Bruce E. & Seo, Byeongseon, 2002. "Testing for two-regime threshold cointegration in vector error-correction models," Journal of Econometrics, Elsevier, vol. 110(2), pages 293-318, October.
    24. von Cramon-Taubadel, Stephan, 1998. "Estimating Asymmetric Price Transmission with the Error Correction Representation: An application to the German Pork Market," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(1), pages 1-18.
    25. Johansen, Soren & Juselius, Katarina, 1994. "Identification of the long-run and the short-run structure an application to the ISLM model," Journal of Econometrics, Elsevier, vol. 63(1), pages 7-36, July.
    26. Bailey, DeeVon & Brorsen, B. Wade, 1989. "Price Asymmetry In Spatial Fed Cattle Markets," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(02), December.
    27. John D. Lawrence & V. James Rhodes & Glenn A. Grimes & Marvin L. Hayenga, 1997. "Vertical coordination in the US pork industry: Status, motivations, and expectations," Agribusiness, John Wiley & Sons, Ltd., vol. 13(1), pages 21-31.
    28. Hahn, William F., 1990. "Price Transmission Asymmetry in Pork and Beef Markets," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, issue 4.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:wly:agribz:v:21:y:2005:i:2:p:253-271. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)

    or (Christopher F. Baum)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.