Asymmetry in Retail, Wholesale, and Shipping Point Pricing for Fresh Vegetables

Abstract

The linkage among retail, wholesale, and shipping point prices for a select group of fresh vegetables is measured using Wolfframs asymmetry model. Procedures for dealing with discontinuous time series are shown, and Granger's causality test is used to show the direction ofthe price linkage. Wholesale prices are shown to lead both retail and shipping point prices. Asymmetry in the retail-wholesale response indicates that wholesale price decreases are reflected at the retail more so than are wholesale price increases. Wholesale price decreases are more fully passed through to the shipping point relative to wholesale increases.

Asymmetric price transmission in the Slovak liquid milk market

“…In other words, price transmission between retail and wholesale prices of liquid milk is positive. This result is not in line with Ward's (1982) result that retail prices respond more to a wholesale price decrease than a wholesale price increase. He reasoned that increasing prices might reduce retail sales and increase the spoilage of highly perishable products.…”

“…This approach was originally introduced by Wolffram (1971) and later adapted by Houck (1977) and Ward (1982). Houck (1977) developed a test for the asymmetric price transmission based on the price segmentation technique into increasing and decreasing phases.…”

“…Ward (1982) extended the Houck's static asymmetric model (Equation 1) to a dynamic representation in order to include the distributed lag effect of the positive and negative cumulative price variations:…”

“…Government interventions to support producer prices could also cause asymmetry (Kinnucan and Forker 1987). Ward (1982) suggests that asymmetries may be found in the price transmission of highly perishable products. If the producer prices increase, the wholesalers and retailers with perishable products would be reluctant to increase prices because they risk a lower demand and ultimately being left with the spoiled product.…”

Asimetrías en la transmisión de precios en el sector del tomate en España

“…En este sentido, y teniendo en cuenta los desarrollos que habían tenido lugar en las últimas dos déca-das en el ámbito del análisis de series temporales, Von Cramon-Taubadel (1998) demostró, en un artículo pionero en este campo, que el enfoque tradicionalmente utilizado hasta la fecha, basado en los trabajos de Wolffram (1971), Houck (1977) y Ward (1982), no era compatible con la posible existencia de precios no estacionarios y cointegrados, especificando un modelo en forma de corrección del error asimétrico que era capaz de recoger la posible existencia de asimetrías tanto en el corto como en el largo plazo. Sin embargo, la existencia de costes de transacción puede generar ajustes en precios no lineales, que no pueden ser recogidos por un modelo lineal de corrección del error.…”