Price transmission and market power in the food chain

The aim of this paper is twofold: from one hand to study the degree of vertical integration in the meat markets (producers, wholesale/transformation and retail) and on the other hand to shed a light on the transmission mechanism of prices. The analyses shows that the transmission between producer and wholesale pork prices to retail is asymmetric. In particular, a substantial difference is observed according to the type of transformation process to which the final product undergoes. A causal ordering is set up and the equations of prices are estimated in a VECM framework, which allows for testing for the presence of market power. Through the impulse response analysis is evaluated the market response to exogenous shocks useful for the analysis of the pass-through mechanism.