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Spatial Price Dynamics in U.S. Regional Broiler Markets

Published online by Cambridge University Press:  28 April 2015

Titus O. Awokuse
Affiliation:
Department of Food and Resource Economics at the University of Delaware
John C. Bernard
Affiliation:
Department of Food and Resource Economics at the University of Delaware
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Abstract

The U.S. broiler industry is highly vertically integrated and increasingly concentrated in the number of firms and production areas. These structural elements could have implications for performance and the functioning of the law of one price (LOP) across regions. This article investigates this using data on four regional markets. Cointegration results indicate that regional prices are spatially linked in the long run, but pairwise cointegration was not found, suggesting that the LOP does not hold. Causality tests confirm the relative importance of price shocks from the South. This finding is reflective of price coordination by firms with production in multiple regions.

Type
Research Article
Copyright
Copyright © Southern Agricultural Economics Association 2007

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