scholarly journals Spatial Price Transmission of Milk Prices Among the Visegrad Countries

2017 ◽  
Vol 6 (2) ◽  
pp. 79-83 ◽  
Author(s):  
Lucia Vargova ◽  
Miroslava Rajcaniova
Keyword(s):  
Raw Milk ◽  
Law Of One Price ◽  
Price Transmission ◽  
Open Market ◽  
Monthly Data ◽  
Cointegration Tests ◽  
Causality Tests ◽  
Producer Prices ◽  
The Law ◽  
Visegrád Countries

Abstract When trading with homogenous goods, consumers are not able to distinguish between individual goods and thus not willing to pay a higher price, if the same product is available for lower price. This leads to an interesting effect, when prices of homogenous goods in different locations in an open market tend to get closer. It is the result of the so-called Law of One Price. Because of the Law of One Price, producers are affected not only by vertical price transmission, but also horizontally. The aim of this paper is to assess the linkage and patterns among the prices of cow’s raw milk in the V4 countries. We apply the price transmission methodology, such as unit root tests, cointegration tests, error correction models, and Granger causality tests. Monthly data for producer prices of raw milk are used, covering the period from January 2005 to June 2017. Our results confirm the existence of the Law of One Price when milk producer prices in different locations are co-integrated.

scholarly journals The world market for soybeans: price transmission into Brazil and effects from the timing of crop and trade

Nova Economia ◽  
2007 ◽  
Vol 17 (2) ◽  
pp. 241-270 ◽  
Author(s):  
Mario A. Margarido ◽  
Frederico A. Turolla ◽  
Carlos R. F. Bueno
Keyword(s):  
United States ◽  
Forecast Error ◽  
The United States ◽  
World Market ◽  
Price Transmission ◽  
Long Run ◽  
Cointegration Tests ◽  
The World ◽  
The Law ◽  
The One

This paper investigates the price transmission in the world market for soybeans using time series econometrics models. The theoretical model developed by Mundlack and Larson (1992) is based on the Law of the One Price, which assumes price equalization across all local markets in the long run and allows for deviations in the short run. The international market was characterized by three relevant soybean prices: Rotterdam Port, Argentina and the United States. The paper estimates the elasticity of transmission of these prices into soybean prices in Brazil. There were carried causality and cointegration tests in order to identify whether there is significant long-term relationship among these variables. There was also calculated the impulse-response function and forecast error variance decomposition to analyze the transmission of variations in the international prices over Brazilian prices. An exogeneity test was also carried out so as to check whether the variables respond to short term deviations from equilibrium values. Results validated the Law of the One Price in the long run. In line with many studies, this paper showed that Brazil and Argentina can be seen as price takers as long as the speed of their adjustment to shocks is faster than in the United States, the latter being a price maker.

scholarly journals Ley de precio único en el mercado español del aceite de oliva

2011 ◽  
Vol 8 (1) ◽  
pp. 37
Author(s):  
José Ángel Roldán Casas ◽  
Rafaela Dios-Palomares
Keyword(s):  
Olive Oil ◽  
Market Integration ◽  
Oil Prices ◽  
Law Of One Price ◽  
Monthly Data ◽  
Long Run ◽  
Oil Markets ◽  
The Law ◽  
Multivariate Cointegration

The aim of this paper is the study of long-run market integration of olive oil in Spain and the testing of the Law of One Price (LOP) in this market. The study is carried out using multivariate cointegration methodology and applied to monthly data on olive oil prices in Spain (1987-2001) corresponding to the regions considered by the Spanish Ministry of Agriculture, Fisheries and Food. The results show that Spanish olive oil markets are highly integrated with the Northeast being the leading market. However, perfect integration cannot be accepted.

The law of one price in the United States and Canadian newsprint markets

2007 ◽  
Vol 37 (8) ◽  
pp. 1495-1504 ◽  
Author(s):  
Xiaoli Tang ◽  
Susanna Laaksonen-Craig
Keyword(s):  
United States ◽  
The United States ◽  
Law Of One Price ◽  
Spatial Integration ◽  
Multivariate Test ◽  
Monthly Data ◽  
Price Series ◽  
Regional Markets ◽  
The Law ◽  
Us West

The paper presents an econometric analysis of spatial integration of the United States and Canadian newsprint markets as reflected in newsprint prices. It applies the Johansen multivariate cointegration procedure to test the law of one price for five regional markets (British Columbia, Ontario, Quebec, US east, and US west) of newsprint using monthly data for 1988–2004. Preliminary data analysis shows that all price series are nonstationary I(1) processes. The hypothesis that the law of one price holds for all five regional newsprint markets simultaneously was not supported by the Johansen multivariate test. The law of one price was also tested for national markets, and it was found to hold between US west and US east newsprint prices. The results suggested that there is a single newsprint market in the United States, whereas there are several distinct newsprint markets in Canada.

scholarly journals Asymmetric price transmission in the Slovak liquid milk market

2013 ◽  
Vol 59 (No. 11) ◽  
pp. 512-524 ◽  
Author(s):  
T. Weldesenbet
Keyword(s):  
Error Correction ◽  
Market Price ◽  
Price Transmission ◽  
Causality Test ◽  
Long Run ◽  
Cointegration Tests ◽  
Retail Prices ◽  
Producer Prices ◽  
Liquid Milk ◽  
Milk Market

The divergence in liquid milk price trends has raised concern about the efficiency of the milk market price transmission in Slovakia. The paper provides empirical evidence on the price transmission among the producer, wholesale, and retail markets of liquid milk in Slovakia, using the monthly data from 1993 to 2010. The empirical analysis is based on the Granger causality and the Johansen cointegration tests and on the asymmetry tests (Houck approach and error correction model approach). The causality test results show that the changes in producer prices cause changes in the wholesale and retail prices; there is a feedback from the retail to producer prices. Moreover, the direction of causality between the wholesale and retail prices flows in both directions. The long-run elasticities of price transmission are, as expected, greater than the short-run elasticities. The cointegration results indicate that the wholesale and producer prices as well as the retail and producer prices are cointegrated, but there is no evidence of cointegration between the wholesale and retail prices. The results of an asymmetric error correction models suggest that the price transmission in the Slovakian liquid milk market is asymmetric both in the short- and long-runs.

A proposition on short-run departures from the law-of-one-price

1982 ◽  
Vol 17 (1) ◽  
pp. 51-60 ◽  
Author(s):  
Mario I. Blejer ◽  
Arye L. Hillman
Keyword(s):  
Law Of One Price ◽  
Short Run ◽  
The Law
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