Price Transmission in Agricultural Markets

We review recent developments in the analysis of price transmission in agricultural markets. Markets may be separated in time, form, and space (as well as in combinations of such factors). Transactions and storage costs as well as production and marketing factors delineate these markets. We show that much of the research on spatial market linkages has reflected methodological advances that have led to increasingly nonlinear time-series models. Advances in the theoretical and empirical literature over the last few decades have demonstrated that price relationships in the food chain are highly context specific. Improvements in marketing, information, and transportation technology have strengthened the links between prices in the food system, but at the same time links in the food chain are increasingly subject to vertical coordination and, thus, less visible to outside observers, including researchers.

Automated summary

Recent developments in the analysis of price transmission in agricultural markets have shown that the research on spatial market linkages has become more sophisticated with the use of increasingly nonlinear time-series models. Different transactions and storage costs, as well as production and marketing factors, define separate markets, and price relationships in the food chain are highly context specific. Improvements in marketing, information, and transportation technology have strengthened price links in the food system, but vertical coordination in the food chain has made these links less visible to outside observers, including researchers.