Title: Testing for market power in the Spanish meat market: price transmission elasticity and asymmetry using econometric models
Authors: Jordi Guillen, Ramon Franquesa
Addresses: Joint Research Centre – European Commission, Institute for the Protection and Security of the Citizen (IPSC), Maritime Affairs Unit, Via E. Fermi 2749, 21027-Ispra, Italy; Department of Economic Policy and World Economics, Faculty of Economy and Business, University of Barcelona, Av. Diagonal 690, 08034-Barcelona, Spain. ' Department of Economic Policy and World Economics, Faculty of Economy and Business, University of Barcelona, Av. Diagonal 690, 08034-Barcelona, Spain
Abstract: This paper pays attention to the Spanish fresh meat market, by analysing how the different stages of the market chain interact and so, investigating the presence of market power. In this paper, we use weekly data for the period 2005-2007, to examine the presence of market power in the meat market. In particular, we analyse the price transmission elasticity and the price transmission asymmetry for fresh beef, pork, lamb, chicken, rabbit and eggs between the farm and retail market stages in Spain. Price causality analysis confirms that, in the short run, upstream level (producer) led to changes in the downstream level (retail). Furthermore, for all products it can be observed that when the producer price decreases, the retail price decreases less than proportional; hence, the retail price increases less than proportional. Therefore, market power does not seem to explain this asymmetry, because the second behaviour contradicts the market power perception. Therefore, it seems that lower volatility in the retail market stage – which may be due to the higher number of available substitutes and sources and higher repricing costs – explains the asymmetric price transmission.
Keywords: price transmission; market power; meat market; econometrics; economy; Spain; price elasticity; price asymmetry; econometric modelling; fresh meat.
International Journal of Computational Economics and Econometrics, 2010 Vol.1 No.3/4, pp.294 - 308
Published online: 05 Jan 2011 *Full-text access for editors Access for subscribers Purchase this article Comment on this article