Theoretical Restrictions on Farm-Retail Price Transmission Elasticities: A Note
Article first published online: 30 OCT 2013
© 2013 Wiley Periodicals, Inc.
Volume 30, Issue 3, pages 278–289, Summer 2014
How to Cite
Kinnucan, H. W. and Tadjion, O. (2014), Theoretical Restrictions on Farm-Retail Price Transmission Elasticities: A Note. Agribusiness, 30: 278–289. doi: 10.1002/agr.21362
- Issue published online: 15 JUL 2014
- Article first published online: 30 OCT 2013
- Alabama Agricultural Experiment Station
Zero restrictions implied by Gardner's (1975) model are exploited to develop a simple test for perfect price transmission. Applying the test to the domestic marketing channels for U.S. beef and pork, we reject the hypothesis of competitive market clearing for pork, but not for beef. A retest using the four-firm concentration ratio in U.S. meat packing as a proxy for market power affirms results from the simple test. [JEL Classification: Q11, Q13].