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Full-Text Articles in Industrial Organization
Do Inventories Have An Impact On Price Transmission? Evidence From The Canadian Chicken Industry, Abdessalem Abbassi, Lota Tamini D., Jean-Philippe Gervais
Do Inventories Have An Impact On Price Transmission? Evidence From The Canadian Chicken Industry, Abdessalem Abbassi, Lota Tamini D., Jean-Philippe Gervais
abdessalem abbassi
This paper investigates the influence of inventories in explaining the magnitude of price transmission. Using data from the Canadian chicken industry, a flexible non-linear inference framework detects significant non-linearities in the relationship between farm and wholesale prices. An empirical model is proposed to estimate a price transmission elasticity and a target inventory equation in the spirit of linear-quadratic inventory models in the macroeconomics literature. A generalized method of moments estimator measures the impact of inventories on price transmission and accounts for the potential correlation between sales and wholesale prices. The price transmission elasticity is lower (higher) when inventories are above …
Evaluating Reforms In Canadian Chicken Marketing Mechanisms Using A Linear-Quadratic Inventory Model, Abdessalem Abbassi, Jean-Philippe Gervais
Evaluating Reforms In Canadian Chicken Marketing Mechanisms Using A Linear-Quadratic Inventory Model, Abdessalem Abbassi, Jean-Philippe Gervais
abdessalem abbassi
Marketing institutions in supply managed industries are evolving due to broad globalization pressures. The output and sales decisions of chicken processing firms under two different pricing mechanisms are modeled using a linear-quadratic inventory model. Decision rules lead to structural equations that relate output and sales to their own lagged values, lagged inventories and lagged prices and cost indicators. A Generalized Method of Moments (GMM) estimator is applied to the system of equations. The null hypotheses no adjustment costs in processing and no role for inventories in marketing are rejected. We simulate the impacts of reforming the chicken pricing mechanism, moving …