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Price and Volatility Transmission and Market Power in the German Fresh Pork Supply Chain

Author:
Assefa, Tsion Taye, Meuwissen, Miranda P.M., Gardebroek, Cornelis, Oude Lansink, Alfons G.J.M.
Source:
Journal of agricultural economics 2017 v.68 no.3 pp. 861-880
ISSN:
0021-857X
Subject:
farms, issues and policy, least squares, market power, models, pork, prices, retail marketing, risk management, slaughterhouses, supply chain
Abstract:
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.
Agid:
5796569