Nonlinearities in the Slovenian apple price transmission

Abstract

Purpose

The purpose of this paper is to assess price linkages and patterns of transmission among producer and consumer markets for apple in Slovenia.

Design/methodology/approach

Non-linear error correction models are applied. Non-linearities are allowed by means of threshold and multivariate local linear regression estimation techniques. Monthly prices over the period 2000-2011 are used in the empirical application.

Findings

Both techniques provide evidence of non-linearities in price adjustments. Findings suggest that producer and consumer prices tend to increase rather than decrease. Results also indicate that parametric threshold approaches may have difficulties in adequately representing price behavior dynamics.

Originality/value

The main contribution of this work to the literature relies on the fact that this is the first attempt to assess vertical price transmission in the apple sector in Central and Eastern European Country markets. Further, it is the first attempt to use multivariate local linear regression techniques in this context.

Citation

Hassouneh, I., Serra, T. and Bojnec, Š. (2015), "Nonlinearities in the Slovenian apple price transmission", British Food Journal, Vol. 117 No. 1, pp. 461-478. https://doi.org/10.1108/BFJ-03-2014-0109