Abstract
The purpose of this study is to explore the dynamic properties of causality and asymmetric price transmission in the distributional channel of the apple market in Korea. Using the wholesale and retail price series of the apple market, we obtain the following results. First, the price trans-mission mechanism reveals the causal relationship channeling from the wholesale price to the re-tail price. Second, we find an asymmetric price transmission from the analysis using the threshold partial adjustment model. The retail price responds strongly when the wholesale price increases. On the other hand, the retail price shows sluggish adjustment when the wholesale price decreases. This study has shown a significant improvement of forecasting accuracy as the threshold partial adjustment model allows for asymmetric price transmission.
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