Commercial margins and price transmission on the Hungarian pigmeat market
Studies in the last decade of the linkage system in the chain between producer and consumer have become popular tools, as has analysis of the competitive situation prevailing on the market. Although there is extensive literature on the links between producer and consumer prices in various countries, only one study (Bojnec, 2002) deals with commercial margins and price transmission in a transition economy. The accepted hypothesis is that margins are greater in transition countries than developed countries because of distorted markets inherited from the socialist economies, shortcomings in the operation of price-setting systems, and unexpected government intervention. The study examines the development of commercial margins and asymmetric price transmission on the Hungarian market for pigmeat. The results of the analysis show that the producer and consumer prices are cointegrated and the producer prices in the long term are weakly exogenous to the consumer prices. The results of structural tests on homogeneity constraints suggest that the price-setting strategy on the pigmeat market is not a competitive one. Price-transmission analysis reveals, contrary to general belief, that the price transmission in this market is asymmetric.
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