Incomplete, Slow, and Asymmetric Price Transmission in Ten Product Markets of Bolivia
With food prices on the rise, understanding the transmission of price shocks, both internationally and domestically, is central for trade policy analysis. This paper examines spatial market integration and its determinants for ten key food products...
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| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2012/12/17065167/incomplete-slow-asymmetric-price-transmission-ten-product-markets-bolivia http://hdl.handle.net/10986/12187 |
| Summary: | With food prices on the rise,
understanding the transmission of price shocks, both
internationally and domestically, is central for trade
policy analysis. This paper examines spatial market
integration and its determinants for ten key food products
in Bolivia, across the four most important cities, and with
the world, over the period 1991-2008. Within Bolivia,
markets for onions, chicken, sugar, and to a lower extent
for potatoes, cooking oil, wheat flour, and rice are
integrated. However, only chicken, sugar, cooking oil, and
rice are integrated with world markets, with incomplete and
slow transmission. The perennial result of asymmetric price
adjustment to foreign shocks also holds for Bolivia:
domestic prices respond faster when the world price
increases than when it decreases. This points to a perennial
recommendation: the importance of stimulating competitive
practices to avoid welfare redistribution due to imperfect
competition. Infrastructure improvements will also
contribute to accessible food prices for the poor. |
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