Analysis of poultry meat price transmission in selected provinces based on arbitrage pricing theory:Application of simultaneously equations approach with two variable thresholds

Document Type : Research Paper

Authors

1 Associate Professor of agricultural Economics ,Department of Agricultural Economics,Sari University of Agricultural sciences and Natural Resources,mazanndaran,iran

2 Assistant Professor of Agricultural Economics ,Department of Agricultural Economics,Sari University of Agricultural sciences and Natural Resources,mazanndaran,iran

3 PhD. Student, Department of Agricultural Economics, Sari Agricultural Sciences and Natural Resources University,sari,mazandaran,iran

Abstract

The problems that have arisen in the last few years show the importance of Price transmission in policy strategies. Price transmission is a market achievement of perfectly competitive and is one of its signs. Considering the changes in the demand for chicken meat and the importance of its market, the purpose of this article is to investigate the price transmission of this product between the four provinces of Tehran, Mazandaran, Gilan, and Isfahan. Monthly prices in selected provinces from 2003 to 1397 were used as research data. A panel threshold simultaneous equations system was used to evaluate how prices were transferred between selected markets. Pattern coefficients were estimated by the three-step least squares method. The results showed that price transmission in Tehran-Mazandaran and Mazandaran-Isfahan markets is symmetric. But in Isfahan-Mazandaran, Golestan-Isfahan, and Mazandaran-Golestan markets is asymmetry. Also, arbitrage in the market between Mazandaran-Golestan and Isfahan-Golestan is significant at the level of 1%. The results also showed that if the resulting differences in prices are bigger than the momentum of the price between two markets and also than the cost of the inter-provincial chicken transportation, the profit made on this exchange provides arbitragers an incentive to conduct this exchange between two provinces. The activity of arbitrators in chicken markets adjusts the price for a period. Based on the findings of this study, to examine the price transmission between markets, not only the changes but also the size of the changes should be considered.

Keywords


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