THE IMPACT OF FOOD SCARES ON PRICE TRANSMISSION IN INTER-RELATED MARKETS / доклад на 25 конференции IAAE, Reshaping Agriculture’s Contribution to Society, International Convention Centre, Durban, South Africa, 16-23 August 2003

This paper is concerned with the impact of the BSE crisis in the UK and focuses on price transmission between retail and farm prices. From a theoretical perspective we show that market power has an effect on price transmission between retail and farm prices following a demand shock. The empirical results suggest that the impact of a food scare on farm prices to be more than double that of retail prices, the direction of this effect being consistent with the impact of oligopoly dominating the effect (if any) of oligopsony.

However, important in assessing the full impact of a food scare is the ability of consumers to switch into substitute products. This is also evident following the BSE crisis with the availability of substitutes contributing significantly to the overall impact on price adjustment.