This paper develops and applies a methodology to test for efficiency in interregional commodity arbitrage. The methodology is empirically manifest as a switching regression model with three regimes: efficient arbitrage, relative shortage, and relative glut. Results from application of the model to U.S. celery marketing indicate significant departures from efficient arbitrage for both California and Florida celery.
The formal relationship between price asymmetry and marketing margins is derived and illustrated with a weekly analysis of prices and margins for fresh lemons and Navel oranges in four retail markets. In the short-run, retail prices and margins for both products were more responsive to f.0.b. price increases than they were to decreases, except for lemons in the Atlanta and Dallas markets and Navel oranges in the Atlanta market. Over time, retail price and margin adjustments to f.0.b. price changes appear to be symmetric with respect to price increases and decreases.Marketing cost increases for farm products have stimulated renewed interest in farm-retail price relationships and the behavior of marketing ,margins. Important priority areas for marketing research identified in a recent report (including efficiency in marketing agricultural products, supply/demand and price analysis, competitive interrelationships, and performance of the marketing system) directly relate to price and marketing margin behavior. California-Arizona citrus producers and handlers frequently express concern over the level and behavior of marketing margins for their fresh lemons and oranges. Marketing margins are relatively large and there is a widespread perception among producers and Support of the Lemon Administrative Committee, data provided by Darlene Ohnemus of Sunkist Growers, Inc., and helpful comments from Journal reviewers are gratefully acknowledged. Giannini Foundation Research Paper No. 909.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.