Price transmission: the case of the UK and the USA broiler markets

The primary aim of this study is to identify whether price transmission asymmetry is present within the UK and the USA broiler market chains as an indicator of market efficiency. The topic of price transmission has seen increased amounts of coverage considering significant price peaks and their effect on agricultural markets, such as the food crises in 2007 and 2008. Standard economic theory suggests that there should be perfect transmissions within markets; thus, any price changes are passed on to the other levels of the chain completely and instantaneously. Empirical results found that the UK retailer price recovers at a rate of 16% per month, whilst the USA retailer prices returning at 15% per month rate. Additionally, results show that no long run asymmetry is present within the value chains suggesting that the market is efficient.