Market integration and asymmetric price transmission in selected domestic markets for major staple foods in Uganda
Abstract In this study, we examined the price transmission dynamics and market integration among domestic markets for Uganda’s major staple foods (matoke, maize, and beans) utilizing the Granger causality analysis, bounds test, Wald test for long- and short-run asymmetry, and the nonlinear ARDL mode...
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| Format: | Article |
| Language: | English |
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SpringerOpen
2023-12-01
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| Series: | Future Business Journal |
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| Online Access: | https://doi.org/10.1186/s43093-023-00281-6 |
| _version_ | 1797415020738379776 |
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| author | Denis Waiswa Fahri Yavuz |
| author_facet | Denis Waiswa Fahri Yavuz |
| author_sort | Denis Waiswa |
| collection | DOAJ |
| description | Abstract In this study, we examined the price transmission dynamics and market integration among domestic markets for Uganda’s major staple foods (matoke, maize, and beans) utilizing the Granger causality analysis, bounds test, Wald test for long- and short-run asymmetry, and the nonlinear ARDL model. Among the key findings, the causal order between wholesale and retail commodity prices flows unidirectionally forward from the wholesale to the retail level across all markets. Wholesale and retail prices for Uganda’s staple foods are interlinked in all markets, and spatially separated markets are also well integrated. The Wald test revealed asymmetric price transmission (APT) in speed alone for the pairs wholesale and retail prices of matoke in Kampala, and wholesale prices of matoke in Mbarara with Kampala retail prices, both APT in magnitude and APT in speed for the pairs wholesale and retail prices of beans in Kampala, wholesale and retail prices of maize in Masindi, and wholesale prices of beans in Masindi with wholesale and retail prices in Kampala. We also found that in the long run, retail prices respond more strongly to wholesale price increases than decreases, an implication of positive APT in the marketing supply chain of Uganda’s major staples. This may be linked to information asymmetry between traders and consumers, traders’ adjustment costs, production levels, inventory management, and the market power of retailers. We thus concluded that final consumers are more likely to experience an increase rather than a decrease in the prices of staples at the retail level, while retailers are more likely to benefit from price decreases at the wholesale level. |
| first_indexed | 2024-03-09T05:42:03Z |
| format | Article |
| id | doaj.art-40475ef4ee704fd9908781537c369c08 |
| institution | Directory Open Access Journal |
| issn | 2314-7210 |
| language | English |
| last_indexed | 2024-03-09T05:42:03Z |
| publishDate | 2023-12-01 |
| publisher | SpringerOpen |
| record_format | Article |
| series | Future Business Journal |
| spelling | doaj.art-40475ef4ee704fd9908781537c369c082023-12-03T12:24:02ZengSpringerOpenFuture Business Journal2314-72102023-12-019112610.1186/s43093-023-00281-6Market integration and asymmetric price transmission in selected domestic markets for major staple foods in UgandaDenis Waiswa0Fahri Yavuz1Department of Agricultural Economics, Faculty of Agriculture, Ataturk UniversityDepartment of Agricultural Economics, Faculty of Agriculture, Ataturk UniversityAbstract In this study, we examined the price transmission dynamics and market integration among domestic markets for Uganda’s major staple foods (matoke, maize, and beans) utilizing the Granger causality analysis, bounds test, Wald test for long- and short-run asymmetry, and the nonlinear ARDL model. Among the key findings, the causal order between wholesale and retail commodity prices flows unidirectionally forward from the wholesale to the retail level across all markets. Wholesale and retail prices for Uganda’s staple foods are interlinked in all markets, and spatially separated markets are also well integrated. The Wald test revealed asymmetric price transmission (APT) in speed alone for the pairs wholesale and retail prices of matoke in Kampala, and wholesale prices of matoke in Mbarara with Kampala retail prices, both APT in magnitude and APT in speed for the pairs wholesale and retail prices of beans in Kampala, wholesale and retail prices of maize in Masindi, and wholesale prices of beans in Masindi with wholesale and retail prices in Kampala. We also found that in the long run, retail prices respond more strongly to wholesale price increases than decreases, an implication of positive APT in the marketing supply chain of Uganda’s major staples. This may be linked to information asymmetry between traders and consumers, traders’ adjustment costs, production levels, inventory management, and the market power of retailers. We thus concluded that final consumers are more likely to experience an increase rather than a decrease in the prices of staples at the retail level, while retailers are more likely to benefit from price decreases at the wholesale level.https://doi.org/10.1186/s43093-023-00281-6ARDL modelAsymmetric price transmissionVertical price transmissionSpatial price transmissionIntegration of marketsNonlinear ARDL |
| spellingShingle | Denis Waiswa Fahri Yavuz Market integration and asymmetric price transmission in selected domestic markets for major staple foods in Uganda Future Business Journal ARDL model Asymmetric price transmission Vertical price transmission Spatial price transmission Integration of markets Nonlinear ARDL |
| title | Market integration and asymmetric price transmission in selected domestic markets for major staple foods in Uganda |
| title_full | Market integration and asymmetric price transmission in selected domestic markets for major staple foods in Uganda |
| title_fullStr | Market integration and asymmetric price transmission in selected domestic markets for major staple foods in Uganda |
| title_full_unstemmed | Market integration and asymmetric price transmission in selected domestic markets for major staple foods in Uganda |
| title_short | Market integration and asymmetric price transmission in selected domestic markets for major staple foods in Uganda |
| title_sort | market integration and asymmetric price transmission in selected domestic markets for major staple foods in uganda |
| topic | ARDL model Asymmetric price transmission Vertical price transmission Spatial price transmission Integration of markets Nonlinear ARDL |
| url | https://doi.org/10.1186/s43093-023-00281-6 |
| work_keys_str_mv | AT deniswaiswa marketintegrationandasymmetricpricetransmissioninselecteddomesticmarketsformajorstaplefoodsinuganda AT fahriyavuz marketintegrationandasymmetricpricetransmissioninselecteddomesticmarketsformajorstaplefoodsinuganda |