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Dynamics of Price Transmission and Market Power in the Turkish Beef Sector

  • Gokhan Ozertan

    (Bogazici University)

  • Sayed H. Saghaian

    (University of Kentucky)

  • Hasan Tekguc

    (Mardin Artuklu Univeristy)

This article addresses the recent beef price increases in Turkey where spikes occurred due to the impact of low milk prices that led to the liquidation of dairy herds, and suppliers’ and retailers’ market power behavior. In this research, we empirically investigate these issues by concentrating on the mechanism of price transmission along the beef marketing channel, and also by testing the possibility of existence of market power. The empirical results reject the null hypothesis of perfect competition by suppliers and retailers and show that beef price behavior is consistent with the presence of oligopolistic market structure. Price transmission is asymmetric for both retail and farm-gate prices. Market power of farmers seems to be short-lived and transitory, due to the excessive slaughter of cows and heifers at the time, whereas consolidation of retailers and their market power behavior raises long-term public concerns and has policy and agribusiness implications.

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File URL: http://www.iif.com.tr/index.php/iif/article/view/iif.2015.349.4317
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Paper provided by Mardin Artuklu Univeristy, Department of Economics in its series Working Papers with number 2012-02.

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Length: 24 pages
Date of creation: Oct 2012
Date of revision:
Publication status: published (İktsat İşletme ve Finans (2015), 30(349): 53-76)
Handle: RePEc:mrd:martwp:2012-02
Contact details of provider: Postal: Mardin Artuklu Univeristy Sosyal Bilimler Enstitusu Diyarbakir Yolu, Yenisehir Mardin, 47100 Turkey
Web page: http://iktisat.artuklu.edu.tr/
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  1. Cemal Atici & Goksel Armagan & Renan Tunalioglu & Gokhan Cinar, 2011. "Does Turkey's integration into the European Union boost its agricultural exports?," Agribusiness, John Wiley & Sons, Ltd., vol. 27(3), pages 280-291, 06.
  2. 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.
  3. Mackinnon, J.G. & Haug, A.A. & Michelis, L., 1996. "Numerical Distribution Functions of Likelihood Ratio Tests for Cointegration," G.R.E.Q.A.M. 96a09, Universite Aix-Marseille III.
  4. Bakucs, Lajos Zoltan & Ferto, Imre, 2008. "Price transmission on the Hungarian milk market," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44175, European Association of Agricultural Economists.
  5. Stephan Brosig & Thomas Glauben & Linde Götz & Enno‐Burghard Weitzel & Ahmet Bayaner, 2011. "The Turkish wheat market: spatial price transmission and the impact of transaction costs," Agribusiness, John Wiley & Sons, Ltd., vol. 27(2), pages 147-161, Spring.
  6. Eruygur, H.O. & Cakmak, Erol H., 2008. "EU Integration of Turkey: Implications for Turkish Agriculture," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44213, European Association of Agricultural Economists.
  7. Martin B. Schmidt, 2000. "The Dynamic Behavior of Wages and Prices: Cointegration Tests within a Large Macroeconomic System," Southern Economic Journal, Southern Economic Association, vol. 67(1), pages 123-138, July.
  8. David A. Bessler & Derya G. Akleman, 1998. "Farm Prices, Retail Prices, and Directed Graphs: Results for Pork and Beef," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1144-1149.
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