Empirical Detection and Quantification of Price Transmission in Endogenously Unstable Markets: The Case of the Global-Domestic Coffee Supply Chain in Papua New Guinea
Ray Huffaker, Garry Griffith, Charles Dambui, Maurizio Canavari
SUSTAINABILITY | MDPI | Published : 2021
Price transmission through global–domestic agricultural supply chains is a fundamental indicator of domestic market efficiency and producer welfare. Conventional price-transmission econometrics test for a theory-based spatial-arbitrage restriction that long-run equilibrium prices in spatially distinct markets differ by no more than transaction costs. The conventional approach is ill-equipped to test for price transmission when endogenously unstable markets do not equilibrate due to systematic arbitrage-frustrating frictions including financial and institutional transaction costs and biophysical constraints. We propose a novel empirical framework using price data to test for market stability ..View full abstract
Awarded by USDA National Institute of Food and Agriculture, Hatch project
This research was supported by the USDA National Institute of Food and Agriculture, Hatch project 1021015, and University of Florida Informatics Institute (UFII) Seed Fund Program.