Asymmetric Price Transmission of Import Livestock in Korea
2018
Jeong, J.H., Konkuk University, Seoul, Republic of Korea | Mun, H.S., Konkuk University, Seoul, Republic of Korea | Chang, J.B., Konkuk University, Seoul, Republic of Korea | Kim, M.K., Konkuk University, Seoul, Republic of Korea
This paper investigates the asymmetric price transmission (APT) of import livestock products (import beef and import pork) in Korea from 2012 to 2017. Many studies have investigated the asymmetric price transmission of domestic livestock products but imported livestock products have been excluded from the analysis. Imported beef and pork have, however, played important role in Korea's meat market due to dramatic increase in their share in Korea's meat market as results of increase in per capita consumption of meat and lower tariffs as a result of Free Trade Agreement. Hence, it is time to look at the market and to analyze the price transfers if there is any distortion in prices. Thus, the objective of this study is to analyze APT of import livestock products between wholesale and retail price. The results of this study shows that imported beef and pork have, respectively, different problems in the short- and the long-run. In the short-run there is no price linkage between wholesale and retail prices so that there is no APT in the market, which is likely to cause market failure and reduce consumers' welfare. Thus, In the long-run, however, there was asymmetric price transmission found, which was likely to cause market inefficiency. In addition, imported beef and pork face different APT problems: imported beef market shows the positive APT while imported pork market shows the negative APT. The main reason why the import livestock market was not found to have the linkage between wholesale and consumer prices in the short-run while APT was found in the long-run is that price transparency was not secured.
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