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Price and Volatility Transmission and Market Power in the German Fresh Pork Supply Chain
Author(s) -
Assefa Tsion Taye,
Meuwissen Miranda P.M.,
Gardebroek Cornelis,
Oude Lansink Alfons G.J.M.
Publication year - 2017
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/1477-9552.12220
Subject(s) - volatility (finance) , market power , economics , german , econometrics , error correction model , supply chain , monetary economics , microeconomics , business , cointegration , marketing , archaeology , history , monopoly
We investigate the relationship between the transmission of price volatility and market power in the German fresh pork supply chain. We use a theoretical model underpinning this relationship followed by an empirical application that uses monthly farm, slaughterhouse and retail pork price data for the period 2000–2011. We examine both the relationships of market power with price level transmission and price volatility transmission in the chain. We use a vector error correction model and least squares regressions to analyse price transmission and price volatility transmissions, respectively. Results show that retail market power limited both types of transmissions. Competition inducing policy measures coupled with measures that support price risk management initiatives of chain actors are suggested.