Asymmetric price transmission: A survey

Abstract

Asymmetric price transmission has been the subject of considerable attention in agricultural gaps in economic theory. but economics. It. is not only important because it may point to also because its presence is often considered for policy put-poses to be evidence of market failure. In this paper we survey the literature on asymmetric price transmission. A wide variety of often conflicting theories of, and empirical tests for, asymmetry co-exist in this literature. We classifiy the different types and causes of asymmetric price transmission and describe the econometric techniques used to quantify it. We also briefly review the results of empirical applications. Outstanding methodological problems and suggestions for future research are discussed. Our main conclusion is that the existing literature is far from being unified or conclusive, and that it has often been largely method-driven, with little attention devoted to theoretical underpinnings and the plausible imeiPretation of results. Hence, much interesting theoretical and empirical work-remains to be done.