Price Transmission Process in Vertical Markets: an Empirical Analysis of Onion Markets in Tamil Nadu State (India)

Abstract

The objective of the paper is to examine price transmission process be tween wholesale and retail markets by adopting Asymmetric Price Transm ission (APT) Model.  The paper has taken a case of Onion ((Allium cepa  L.) wholesale and retail markets in Tamil Nadu state, India.   The pa per used wholesale and retail prices data from secondary sources.  The results show that high margin at retail and wholesale levels of price s points to possibility of distortion in prices which may lead to an a symmetric process in the vertical market. The speed and magnitude of p rice changes and also the type of asymmetry in the vertical market sys tem has identified the presence of both positive and negative asymmetr y. With respect to speed, where the markets have shown negative asymme try, there is evidence of retail prices responding much faster to decr ease in wholesale prices than to increases in wholesale prices. Where a positive asymmetry holds, the result is the opposite. Keywords : Veg etables, Asymmetry, Efficiency, Market Integration and Symmetry