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Asymmetric response of retail milk prices in the northeast revisited

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  • Daniel A. Lass

    (Department of Resource Economics, University of Massachusetts, Amherst, Massachusetts 01003)

Abstract

Retail milk price responses to farm price changes were analyzed for Boston, Massachusetts, and Hartford, Connecticut. Prior research concluded that asymmetries did not exist in the response of retail fluid milk prices to changes in farm prices. This study finds transmission rates are greater for the Compact period (100-120%) than the pre-Compact period (66-88%). Short-run asymmetries are apparent. Retail prices respond rapidly to farm price increases, but slowly to farm price decreases. This study also finds evidence of long-run asymmetry. When equivalent farm price increases and decreases occur, retail prices do not return to the same levels that were observed before the price changes. Such long-run asymmetry was not observed in prior empirical studies of retail prices in the Northeast. [EconLit Classification: Q110, Q130, L110]. © 2005 Wiley Periodicals, Inc. Agribusiness 21: 493-508, 2005.

Suggested Citation

  • Daniel A. Lass, 2005. "Asymmetric response of retail milk prices in the northeast revisited," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 493-508.
  • Handle: RePEc:wly:agribz:v:21:y:2005:i:4:p:493-508
    DOI: 10.1002/agr.20061
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    References listed on IDEAS

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    1. Benaissa Chidmi & Rigoberto A. Lopez & Ronald W. Cotterill, 2005. "Retail oligopoly power, dairy compact, and Boston milk prices," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 477-491.
    2. 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.
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    Cited by:

    1. Stewart, Hayden & Don, P. Blayney, 2011. "Retail Dairy Prices Fluctuate with the Farm Value of Milk," Agricultural and Resource Economics Review, Cambridge University Press, vol. 40(02), pages 201-217, August.
    2. Jean-Philippe Gervais, 2011. "Disentangling nonlinearities in the long- and short-run price relationships: an application to the US hog/pork supply chain," Applied Economics, Taylor & Francis Journals, vol. 43(12), pages 1497-1510.
    3. Bolotova, Yuliya V. & Novakovic, Andrew M., 2015. "An Empirical Analysis of Wholesale Cheese Pricing Practices on the Chicago Mercantile Exchange (CME) Spot Cheese Market," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 18(3).
    4. Rabinowitz, Adam & Liu, Yizao & Chen, Xuan, 2016. "The Impact of Price Regulations on Farm-Retail Price Transmission: The Case of Fluid Milk," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230095, Southern Agricultural Economics Association.
    5. Abdessalem Abbassi & Lota D. Tamini & Jean‐Philippe Gervais, 2012. "Do Inventories Have an Impact on Price Transmission? Evidence From the Canadian Chicken Industry," Agribusiness, John Wiley & Sons, Ltd., vol. 28(2), pages 173-186, March.
    6. Mohammad J Alam & Raghbendra Jha, 2016. "Asymmetric threshold vertical price transmission in wheat and flour markets in Dhaka (Bangladesh): seemingly unrelated regression analysis," ASARC Working Papers 2016-03, The Australian National University, Australia South Asia Research Centre.
    7. Ioanna Reziti, 2014. "Price transmission analysis in the Greek milk market," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 64(4), pages 75-86, October-D.
    8. Elena Lopez & Rigoberto A. Lopez, 2009. "Demand for differentiated milk products: implications for price competition," Agribusiness, John Wiley & Sons, Ltd., vol. 25(4), pages 453-465.
    9. Bolotova, Yuliya V., 2017. "An Analysis of Retail Fluid Milk Pricing in the Eastern United States," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252744, Southern Agricultural Economics Association.
    10. Zoltan Bakucs & Jan Falkowski & Imre Ferto, 2012. "Does Farm and Processing Industry Structure Matter for Price Transmission? Some Evidence From Transition Countries: A Comparison of Dairy Sectors in Hungary and Poland," IEHAS Discussion Papers 1212, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    11. Popović, Rade & Radovanov, Boris & Jeremić, Marija, 2013. "Volatile World Milk Prices and Its Affect to National Market- Case of Serbian Milk Market," 135th Seminar, August 28-30, 2013, Belgrade, Serbia 160393, European Association of Agricultural Economists.

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