Power of Ukrainian Sugar Producers
2022
Dereva, Mykola | Rajcianova, Miroslava
In recent years the concentration of Ukrainian sugar beet processors has reached exceptionally high levels. The two largest Ukrainian sugar factories account for more than 40% of total sugar production. In addition, sugar prices rose sharply in 2020. These signals led the Antimonopoly Committee of Ukraine to launch an investigation into the relations in the sugar industry due to the possible existence of collusion. Market power allows stronger party to pursue pricing strategies that would be detrimental for weaker parties in the supply chain and lead to price transmission asymmetries. To study the price passthrough in Ukrainian sugar prices we employ the threshold cointegration approach, using monthly producer and consumer sugar prices in Ukraine from January 2013 to September 2021. The results of our analysis suggest asymmetric price adjustments and a significantly slower price response to negative deviations from long-term equilibrium than to positive ones.
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