Premium
Asymmetry in Farm‐Retail Price Transmission for Major Dairy Products
Author(s) -
Kinnucan Henry W.,
Forker Olan D.
Publication year - 1987
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1242278
Subject(s) - economics , econometric model , product (mathematics) , information asymmetry , econometrics , business , agricultural science , agricultural economics , microeconomics , environmental science , mathematics , geometry
An econometric model is used to estimate the net relationship between changes in the farm‐level price of milk and changes in the retail prices of four major dairy products—fluid milk, butter, cheese, and ice cream. Results indicate that the farm‐retail price transmission process in the dairy sector is asymmetric. Retail dairy product prices adjust more rapidly and more fully to increases in the farm price of milk than to decreases. The role in pricing asymmetry of retail demand versus farm supply shifts is tested via a Chow‐type test. Asymmetry is tested using the Houck procedure for estimating nonreversible functions.