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What causes asymmetric price transmission in agro-food sector? Meta-analysis perspective

  • Bakucs, Lajos Zoltan
  • Falkowski, Jan
  • Ferto, Imre

There now exists a large literature on price transmission in agro-food sectors. However, a great majority of empirical studies focus on the existence of asymmetry and, by and large, do not allow investigating the reason for its presence or absence. This is in sharp contrast to the theoretical literature that provides a number of explanations for why we should expect (a)symmetry. In response to this, this paper tries to uncover the reasons for price asymmetric transmission in the agro-food chain. To do so, we use meta-analysis drawing on the existing studies from this area. While there are some limitations to our data, we believe that this perspective could be very useful in advancing our understanding of price transmission mechanisms. Our findings suggest that asymmetric price transmission in farm-retail relationship is more likely to occur in sectors/countries with more fragmented farm structure and more restrictive regulations on price controls in retail sector. Instead, more restrictive regulations on entry barriers and operational conduct of retail trade tend to promote symmetric price transmission. The latter is also more likely in the presence of strong processing industry.

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File URL: http://purl.umn.edu/134765
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Paper provided by Agricultural Economics Society in its series 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK with number 134765.

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Date of creation: Apr 2012
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Handle: RePEc:ags:aesc12:134765
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