Does market structure influence price transmission in the agro-food sector?

Bakucs, Lajos Zoltán and Falkowski, J. and Fertő, Imre (2014) Does market structure influence price transmission in the agro-food sector? JOURNAL OF AGRICULTURAL ECONOMICS, 65 (1). pp. 1-25. ISSN 0021-857X

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Abstract

There 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 investigate the reason for its presence or absence. This is in sharp contrast to the theoretical literature that provides a number of explanations of why we should expect (a)symmetry. In response, this paper investigates the reasons for asymmetric price transmission in the agro-food chain, using meta-analysis of exist- ing studies. Our focus is on the organizational and institutional characteristics of the agro-food supply chain. Our findings suggest that asymmetric price transmis- sion in farm – retail relationships is more likely to occur in sectors/countries with more fragmented farm structure, higher governmental support and more restrictive regulations on price controls in the retail sector. On the other hand, more restric- tive regulations on entry barriers in the retail sector and the relative importance of the sector tend to promote symmetric farm – retail price transmission. The latter is also more likely in the presence of a strong processing industr

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