IDEAS home Printed from https://ideas.repec.org/p/ags/aaea25/360848.html

Assessing the Impact of Highly Pathogenic Avian Influenza (HPAI) Outbreak Intensity on Price Transmission in the U.S. Egg Market

Author

Listed:
  • Ajoseh, Solomon
  • Thornsbury, Suzanne
  • Onel, Gulcan

Abstract

This study examines whether the severity of Highly Pathogenic Avian Influenza (HPAI) outbreaks differentially affects price transmission between wholesale and retail markets in the U.S. egg industry. Using weekly data for Grade A large egg prices and commercial bird losses from 2014 to 2024, the analysis investigates how pricing behavior shifts during periods of biological disruption. First, a Vector Error Correction Model (VECM) is used to assess both long-run equilibrium and short-run adjustments across market segments over the entire period. Results reveal a clear asymmetry in adjustment behavior. Retail prices serve as the main correction channel, adjusting approximately 39% towards the long-run equilibrium in response to prior deviations. This responsiveness likely reflects the pressures of consumer-facing pricing and the need for retail competitiveness. In contrast, wholesale prices show no evidence of correction, suggesting structural rigidities such as internal transfer pricing or long planning horizons may hinder upstream responsiveness. To assess whether outbreak severity influences pricing dynamics, weekly observations are classified into three regimes—no outbreak, moderate outbreak, and high outbreak using a grid search procedure to determine the threshold point. Regime-specific descriptive statistics reveal notable differences. Retail prices rise sharply during moderate outbreaks but decline slightly during high outbreaks, while wholesale prices rise steadily with increasing outbreak severity. A bootstrap likelihood ratio test is used to compare results from the conventional VECM with a three-regime Threshold Vector Error Correction Model (TVECM) to pricing evaluate whether price transmission varies depending on the scale of biological disruptions in the market. Overall, findings point to nonlinear, regime-sensitive market dynamics in the presence of HPAI shocks. Recognizing these distinctions will be critical for developing responsive market interventions, particularly in managing the vulnerabilities of perishable commodity supply chains during disease-driven crises.

Suggested Citation

  • Ajoseh, Solomon & Thornsbury, Suzanne & Onel, Gulcan, 2025. "Assessing the Impact of Highly Pathogenic Avian Influenza (HPAI) Outbreak Intensity on Price Transmission in the U.S. Egg Market," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360848, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:360848
    DOI: 10.22004/ag.econ.360848
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/360848/files/75223_94956_105300_AAEA.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.360848?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jochen Meyer & Stephan von Cramon‐Taubadel, 2004. "Asymmetric Price Transmission: A Survey," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(3), pages 581-611, November.
    2. Hao Lan & Tim A. Lloyd & Steve McCorriston & Christopher Wyn Morgan, 2022. "Retailer heterogeneity and price transmission," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(5), pages 1679-1700, October.
    3. 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.
    4. Goodwin, Barry K. & Harper, Daniel C., 2000. "Price Transmission, Threshold Behavior, And Asymmetric Adjustment In The U.S. Pork Sector," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(3), pages 1-11, December.
    5. Martinez, Stephen W., 2002. "Vertical Coordination Of Marketing Systems: Lessons From The Poultry, Egg, And Pork Industries," Agricultural Economic Reports 34051, United States Department of Agriculture, Economic Research Service.
    6. Pavel Vavra & Barry K. Goodwin, 2005. "Analysis of Price Transmission Along the Food Chain," OECD Food, Agriculture and Fisheries Papers 3, OECD Publishing.
    7. Tim Lloyd, 2017. "Forty Years of Price Transmission Research in the Food Industry: Insights, Challenges and Prospects," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 3-21, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erdal Erol & Sayed H. Saghaian, 2022. "The COVID-19 Pandemic and Dynamics of Price Adjustment in the U.S. Beef Sector," Sustainability, MDPI, vol. 14(8), pages 1-14, April.
    2. Surathkal, Prasanna & Chung, Chanjin & Han, Sungill, 2014. "Asymmetric Adjustments in Vertical Price Transmission in the US Beef Sector: Testing for Differences among Product Cuts and Quality Grade," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170196, Agricultural and Applied Economics Association.
    3. Irz, Xavier & Mazzocchi, Mario & Réquillart, Vincent & Soler, Louis-Georges, 2015. "Research in Food Economics: past trends and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 187-237, March.
    4. Solomon Aklilu & Flora Guangzhi Cai & Deepananda Herath & Jill Smilestone & Laura Stortz, 2025. "Farmers’ share of the consumer food dollar in Canada: What input‐output data from 1997–2021 show us," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 73(4), pages 397-421, December.
    5. Lee, Jun & Gómez, Miguel I., 2011. "Elimination of the Coffee Export Quota System Revisited: Evaluating International-to-," 2011 Conference, April 18-19, 2011, St. Louis, Missouri 285357, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    6. Sassi, Maria & Mamo, Yonas Abera, 2019. "Vertical price transmission in the white teff market in Ethiopia," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 58(2), March.
    7. Rezitis Anthony N & Stavropoulos Konstantinos S, 2011. "Price Transmission and Volatility in the Greek Broiler Sector: A Threshold Cointegration Analysis," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 9(1), pages 1-37, July.
    8. Hugo Ferrer-Pérez & Filippo Arfini & José M. Gil, 2019. "Modelling Price Transmission within the Supply Chain under a European Protected Designation of Origin Framework: The Case of Parmigiano Reggiano in Italy," Social Sciences, MDPI, vol. 8(3), pages 1-13, March.
    9. Judith Hillen, 2021. "Vertical price transmission in Swiss dairy and cheese value chains," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-21, December.
    10. Maurizio Aragrande & Mauro Bruni & Alberico Loi & Roberto Esposti, 2017. "The effect of EU 2006 sugar regime reform on vertical price transmission," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-20, December.
    11. Muhammed A. Usman & Mekbib G. Haile, 2017. "Producer to retailer price transmission in cereal markets of Ethiopia," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 9(4), pages 815-829, August.
    12. Chi Trung Nguyen & Luis Emilio Morales & Nam Hoang & Jean Balié & Harold Glenn Valera, 2025. "How Integrated Are Rice Markets in Asia? Effects of Crises and Rice Export Quality on Price Shock Transmission," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 69(4), pages 960-973, October.
    13. Luca Cattivelli & Federico Antonioli, 2023. "When cointegration is interrupted: Price transmission analysis in the Italian dairy‐feed industry," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 744-761, July.
    14. Subervie, Julie, 2011. "Producer price adjustment to commodity price shocks: An application of threshold cointegration," Economic Modelling, Elsevier, vol. 28(5), pages 2239-2246, September.
    15. Daniele Cavicchioli, 2018. "Detecting Market Power Along Food Supply Chains: Evidence and Methodological Insights from the Fluid Milk Sector in Italy," Agriculture, MDPI, vol. 8(12), pages 1-22, December.
    16. Jean‐Paul Chavas & Fanghui Pan, 2020. "The Dynamics and Volatility of Prices in a Vertical Sector," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 353-369, January.
    17. Rezitis, Anthony N. & Tsionas, Mike, 2019. "Modeling asymmetric price transmission in the European food market," Economic Modelling, Elsevier, vol. 76(C), pages 216-230.
    18. Traub, Lulama Ndibongo & Myers, Robert J. & Jayne, Thomas S. & Meyer, Ferdinand H., 2010. "Measuring Integration and Efficiency in Maize Grain Markets: The Case of South Africa and Mozambique," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96644, African Association of Agricultural Economists (AAAE).
    19. Rahman, Mohammad Chhiddikur, 2020. "Welfare Impact of Asymmetric Price Transmission on Bangladesh Rice Consumers," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 242248.
    20. Fousekis, Panos & Katrakilidis, Constantinos & Trachanas, Emmanouil, 2016. "Vertical price transmission in the US beef sector: Evidence from the nonlinear ARDL model," Economic Modelling, Elsevier, vol. 52(PB), pages 499-506.

    More about this item

    Keywords

    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea25:360848. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.