Munich Personal RePEc Archive

Vertical price relationships between different cuts and quality grades in the U.S. beef marketing channel: a wholesale-retail analysis

Panagiotou, Dimitrios and Stavrakoudis, Athanassios (2017): Vertical price relationships between different cuts and quality grades in the U.S. beef marketing channel: a wholesale-retail analysis.

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Abstract

The present article offers an empirical assessment of the degree and the structure of price dependence between wholesale and retail market levels in the U.S. beef industry, while accounting for product differentiation. This is pursued using the statistical tool of copulas and monthly rates of price changes for different cuts and quality grades of the beef product for the time period 2002–2016. Six wholesale–retail pairs were formed based on different cuts and quality grades. The empirical results suggest that prices at retail level respond differently to extreme negative and positive wholesale price shocks. More specifically, extreme price increases at the wholesale level are transmitted to the retail level in five out of six pairs whereas extreme price decreases are not passed from the wholesale to the retail market level in five out of six pairs. Based on these findings, there is evidence of asymmetric price relationships between wholesale–retail market levels in the U.S. beef marketing channel, when quality differences in cuts and grades is considered.

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