Analysis of Vertical Price Transmission along Sugar Supply Chain in Kenya
Journal Title: IOSR Journal of Economics and Finance (IOSR-JEF) - Year 2018, Vol 9, Issue 1
Abstract
Asymmetry of price transmission uses price data and information to determine market performance and imperfections. The analysis may be spatial (Horizontal) or along the marketing chain (Vertical). This paper sought to analyze vertical price transmission in the Kenyan sugar market supply chains. Time series data was extracted from the Kenya Sugar Board Year Book of Statistics. Monthly Sugar prices for producers, wholesalers and retailers were obtained for the period of 2003 to 2014. Tests for unit root using Dickey Fuller test, Kwiatkowski-Phillips-Schimidt-Shin (KPSS) test and Phillips-Perron tests found out that the time series exhibited unit root. Johansen cointegration test showed no co-integrating equations. A Vector Autoregression was estimated. Granger Causality Wald tests indicated that ex-factory prices Granger caused wholesale and retail prices, while retail prices did not granger cause wholesale nor ex-factory prices. TAR and MTAR were estimated and the null hypotheses of no threshold cointegration and symmetry in prices were rejected. The Kenya sugar market showed some imperfections, and it was concluded that from the producer to the consumer, the Law of One Price does not hold for Kenyan sugar markets.
Authors and Affiliations
Wilfrey Vuhya Siahi, Vincent N’geno, Philip Mulama Nyangweso
Keywords
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- EP ID EP414446
- DOI 10.9790/5933-0901014451.
- Views 233
- Downloads 0
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