Asymmetric price transmission in the distribution channels of pork: Focusing on the effect of policy regulation of sunday sales by hypermarkets in Korea

Heesun Lim, Byeong Il Ahn

Research output: Contribution to journalArticlepeer-review

Abstract

In this paper, we investigate whether there exists market inefficiency in the distribution channel of pork by estimating a developed partial adjustment model that captures the asymmetric price transmission from wholesale to retail prices. The estimation results show that market efficiency exists for the wholesale and two types of retail markets in the distributional channel of pork in Korea. The government's regulation on Sunday sales by hypermarkets plays a significant role in increasing market efficiency, forcing more competition among hypermarkets, and chan-ging the structure of asymmetric price transmission from wholesale to traditional market prices. The results suggest that the policy goal has been achieved in the traditional market by leading to a more efficient price forming due to a le-ssened degree of asymmetric price transmission from the wholesale price. Although market inefficiency has been maintained in the distribution channel between wholesale market and hypermarket, the behavior of price setting by hy-permarkets has not been influenced by the policy.

Original languageEnglish
Pages (from-to)499-509
Number of pages11
JournalAgricultural Economics (Czech Republic)
Volume66
Issue number11
DOIs
Publication statusPublished - 2020

Keywords

  • Market efficiency
  • Marketing channel
  • Retail price
  • Threshold Partial Adjustment Model
  • Wholesale price

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics, Econometrics and Finance(all)

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