Asymmetric Price Transmission: A Survey

Authors

  • Jochen Meyer,

    Corresponding author
    1. Jochen Meyer is a research associate in the Department of Agricultural Economics at the University of Göttingen, Germany.
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  • Stephan von Cramon-Taubadel

    1. Stephan von Cramon-Taubadel is a professor in the Department of Agricultural Economics at the University of Göttingen, Germany.
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  • We are grateful to two anonymous referees for helpful comments on an earlier version of this paper

E mail mail@iochenmeyer.de for correspondence.

Abstract

Asymmetric price transmission has been the subject of considerable attention in agricultural economics. It is not only important because it may point to gaps in economic theory, but also because its presence is often considered for policy purposes to be evidence of market failure. In this paper we survey the literature on asymmetric price transmission. A wide variety of often conflicting theories of, and empirical tests for, asymmetry co-exist in this literature. We classify the different types and causes of asymmetric price transmission and describe the econometric techniques used to quantify it. We also briefly review the results of empirical applications. Outstanding methodological problems and suggestions for future research are discussed. Our main conclusion is that the existing literature is far from being unified or conclusive, and that it has often been largely method-driven, with little attention devoted to theoretical underpinnings and the plausible interpretation of results. Hence, much interesting theoretical and empirical work remains to be done.

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