A Test on Asymmetric Price Transmission of Livestock Products

Abstract

The retail prices of meat products were often reported to be not responding appropriately to changes in producer prices, which would provide the impetus to analyze asymmetric price behaviors for various livestock products. This study examined the asymmetric price transmissions of domestic Korean beef, pork, chicken and egg products in marketing channel (from production to retail markets) by using both autoregressive distributed lag and asymmetric error correction models. Both daily and monthly prices were used to investigate whether there is any difference between daily and monthly price behaviors. In addition, influential livestock diseases such as FMD and HPAI were considered in the models to isolate the impacts of the disease on the prices. Asymmetric price transmissions were found for daily prices of products in all market relations, while such asymmetry was not detected for the products that use monthly prices. The existence of asymmetric price transmissions indicates that there are inefficient resource allocations, calling for efforts of all involved parties to improve meat product market efficiency.