Abstract

This paper analyses the relationship between monthly observations on farm level and retail level prices of three meats, seven fresh vegetables, five fresh fruits, eggs and cereals over the 1970's. A priori reasoning and results of Sim's casuality tests suggest that in most cases changes in farm prices cause changes in retail prices rather than the reverse or a simultaneous relationship. Markup price relationships are estimated. Most of the variation of retail prices is explained by the current farm price, lagged farm prices, a wage variable, and last period's retail price of a substitute product.

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