Asymmetry in Price Transmission: Evidence from the Wheat-Flour Supply Chain in Russia

Sergei Kharin

DOI 10.7160/aol.2021.130307
No 3/2021, September
pp. 67-75

Kharin, S. (2021) “Asymmetry in Price Transmission: Evidence from the Wheat-Flour Supply Chain in Russia", AGRIS on-line Papers in Economics and Informatics, Vol. 13, No. 3, pp. 67-75. ISSN 1804-1930. DOI 10.7160/aol.2021.130307.

Abstract

Price volatility has serious implications for economic welfare of various agents in the grain supply chain. The paper examines asymmetric price transmission along the wheat producer-processor supply chain in Russia using log-transformed monthly prices during the period of 2000-2019. Having specified linear asymmetric vector error correction model, we exposed the long-term cumulative asymmetry in price transmission, however, the hypothesis of short-term symmetry presence failed to reject. The analysis revealed dominant position for wheat producers and wholesalers over the wheat processors. Imperfect competition and their resulting market power, as well as the existence of a huge number of illegal processors are the main causes for asymmetric price transmission on the Russian wheat market.

Keywords

Price transmission, asymmetry, grain market, Russia, food.

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