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Asymmetry in Farm-Retail Price Transmission in the Northeastern Fluid Milk Market

  • Mathieu Frigon
  • Maurice Doyon
  • Robert F.J. Romain
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    A hybrid approach to estimate the asymmetric price transmission between the farm gate and the retail market is proposed. The model is estimated for the fluid milk market of the Northeast U.S., that of the metropolitan area of New York City as well as that of Upstate New York. Spatially disaggregated data allows the impact of regional dairy regulation on the farm-retail price spread to be assessed, as well as the behavior of the middlemen regarding price transmission on markets with different levels of retail concentration to be estimated. Results suggest that intermediaries transmit variations in milk farm price in an asymmetric way in the short-run; that governmental intervention might force middlemen to act competitively in terms of price transmission; and that a high degree of concentration at the retail level is not synonymous with inefficient price transmission.

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    File URL: http://fmpc.uconn.edu/publications/rr/rr45.pdf
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    Paper provided by University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy in its series Food Marketing Policy Center Research Reports with number 045.

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    Date of creation: 1999
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    Handle: RePEc:zwi:fpcrep:045
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