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Processing Technology, Market Power and Price Transmission
Author(s) -
McCorriston S.,
Morgan C. W.,
Rayner A. J.
Publication year - 1998
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/j.1477-9552.1998.tb01263.x
Subject(s) - market power , price elasticity of demand , economics , elasticity (physics) , transmission (telecommunications) , industrial organization , price elasticity of supply , power transmission , electric power industry , commerce , microeconomics , business , agricultural economics , power (physics) , telecommunications , electricity , computer science , engineering , materials science , physics , quantum mechanics , electrical engineering , composite material , monopoly
This paper focuses on the extent to which price changes occurring at the farm‐level are transmitted to the retail sector. A price transmission elasticity is derived which is shown to depend on the degree of market power in the food industry and the nature of the food industry's processing technology. The offsetting role of the processing technology and market power in determining the extent of price transmission are highlighted. A case‐study reports values for the price transmission elasticity for the US beef and pork sectors.