Open AccessAsymmetry in Price Transmission: Evidence from the Wheat-Flour Supply Chain in Russia
Author(s) -
Сергей Харин,
Voronezh Technologies named after G.F. Morozov
Publication year - 2021
Publication title -
agris on-line papers in economics and informatics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.245
H-Index - 16
ISSN - 1804-1930
DOI - 10.7160/aol.2021.130307
Subject(s) - imperfect competition , volatility (finance) , imperfect , economics , asymmetry , position (finance) , market power , supply chain , transmission (telecommunications) , econometrics , monetary economics , microeconomics , business , telecommunications , computer science , linguistics , philosophy , physics , finance , quantum mechanics , marketing , monopoly
Price volatility has serious implications for economic welfare of various agents in the grain supply chain. The paper examines asymmetric price transmission along the wheat producer-processor supply chain in Russia using log-transformed monthly prices during the period of 2000-2019. Having specified linear asymmetric vector error correction model, we exposed the long-term cumulative asymmetry in price transmission, however, the hypothesis of short-term symmetry presence failed to reject. The analysis revealed dominant position for wheat producers and wholesalers over the wheat processors. Imperfect competition and their resulting market power, as well as the existence of a huge number of illegal processors are the main causes for asymmetric price transmission on the Russian wheat market.