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Measuring Price Transmission in the International Fresh Fruit and Vegetable Supply Chain: The Case of Israeli Grapefruit Exports to the EU

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  • Goetz, Linde
  • von Cramon-Taubadel, Stephan
  • Kachel, Yael

Abstract

We study vertical price transmission between Israel and the EU in the imperfectly competitive Israeli citrus export sector, which emerged after the former parastatal marketing board was liberalised in 1991. We find evidence of positive asymmetry in price transmission, implying that Israeli exporters’ profits increase at the expense of grapefruit growers, and we argue that this is evidence that Israeli citrus exporters exert market power vis-à-vis Israeli citrus growers. This study is unique in investigating vertical price transmission in the international supply chain for fresh fruits and vegetables (FFV). International FFV trade is especially susceptible to the abuse of market power since transparency regarding the determination of the grower price is often very low. In our model approach we explicitly account for possible changes in exporters’ pricing behaviour in the post-liberalization period. The analysis finds that exporters transmitted changes in EU import prices to Israeli growers asymmetrically in the volatile phase directly after liberalization, but symmetrically in the calm phase thereafter. Furthermore, results suggest that the measured asymmetry in price transmission is economically significant. Overall, our study demonstrates that liberalization improved the efficiency of Israel’s international citrus marketing channel, although this took time and was probably accelerated by government market intervention.

Suggested Citation

  • Goetz, Linde & von Cramon-Taubadel, Stephan & Kachel, Yael, 2008. "Measuring Price Transmission in the International Fresh Fruit and Vegetable Supply Chain: The Case of Israeli Grapefruit Exports to the EU," Discussion Papers 42833, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    • Handle: RePEc:ags:huaedp:42833
    DOI: 10.22004/ag.econ.42833
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    Cited by:

    1. Pratap Kumar JENA, 2016. "Commodity market integration and price transmission: Empirical evidence from India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(608), A), pages 283-306, Autumn.
    2. Federica Di Marcantonio & Pavel Ciaian & Vicente Castellanos, 2018. "Unfair trading practices in the dairy farm sector: Evidence from selected EU regions," JRC Research Reports JRC112770, Joint Research Centre.
    3. Pratap Kumar JENA, 2016. "Commodity market integration and price transmission: Empirical evidence from India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(608), A), pages 283-306, Autumn.
    4. Di Marcantonio, F. & Ciaian, P. & Castellanos, V., 2018. "Unfair trading practices in the dairy farm sector: Insights from an EU field survey," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275886, International Association of Agricultural Economists.
    5. Daphne M.I. Verreth & Grigorios Emvalomatis & Frank Bunte & Ron Kemp & Alfons G.J.M. Oude Lansink, 2015. "Price Transmission, International Trade, and Asymmetric Relationships in the Dutch Agri‐Food Chain," Agribusiness, John Wiley & Sons, Ltd., vol. 31(4), pages 521-542, October.
    6. Byeong-il, Ahn & Lee, Hyunok, 2015. "Vertical Price Transmission of Perishable Products: The Case of Fresh Fruits in the Western United States," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(3), pages 1-20, September.

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