Vertical price transmission in the Danish food chain

Research output: Chapter in Book/Report/Conference proceedingConference abstract in proceedingsResearch

This purpose of this paper is to investigate price transmission patterns through selected Danish food chains – from primary production to processing, from processing to wholesale and from wholesale to retail prices. Specifically, the study addresses the following research questions: To what extent are commodity prices transmitted from one stage to another in the food chain? What is the time horizon in the price transmission? Is price transmission symmetric – in the short run and in the long run? Is the degree of price transmission affected by the degree of concentration in the supply and demand stage considered? These questions are analysed theoretically and empirically using econometric analysis. 6 food chains are investigated: pork, chicken, eggs, milk, sugar and apples. Preliminary empirical results suggest that for most commodities, price transmission tends to be upward asymmetric, i.e. stronger impact of upward than downward price changes. Most asymmetries in price transmission occur in the retail stage, fewest asymmetries occur in the wholesale stage. At the same time, most asymmetries in price transmission occur in the short run, whereas price transmission is symmetric in the long run in every case except one. Price transmission for commodities subject to price regulation tends to be less asymmetric than for commodities without price regulation. The degree of industry concentration seems to influence both the degree and asymmetry of price transmission, but the influence differs between sectors and stages of the food supply chain. Both transaction costs and imperfect competition seem to contribute to these asymmetries.
Original languageEnglish
Title of host publicationThe northern european food insutry
Number of pages12
PublisherNordic Associations of Agricultural Scientists
Publication date2005
Publication statusPublished - 2005
EventNJF seminar - Helsinki, Finland
Duration: 24 Nov 200525 Nov 2005
Conference number: 381


ConferenceNJF seminar

ID: 7998628