Asymmetric price transmission in a changing food supply chain

Abstract

The farmed salmon supply chain in Europe is changing. There is a growing concentration at intermediary levels in the supply chain and more product differentiation in the market. This means that different price determination processes could apply in various product sub-markets. In this study, price transmission relationships in the salmon value chain were investigated at two different product levels. Specifically, a relatively unprocessed salmon product (fresh salmon) and a more processed product (smoked salmon) were investigated since processing costs might have a significant impact on a vertical price linkage. A threshold cointegration model was applied to estimate the price transmission between the Norwegian export market and the retail markets of France and Spain. The results indicated a price transmission relationship along the fresh salmon chain in both markets; but not along the smoked salmon chains in either market. Furthermore, for the fresh salmon value chain, asymmetric adjustment was observed in both markets.