Analysis of Market Structure and the Impact of Price Transmission on Marketing Margin in Iranian Beef Market

Hosseini, Seyed Safdar; Nikookar, Afsaneh; Door Andish, Arash

Analysis of Market Structure and the Impact of Price Transmission on Marketing Margin in Iranian Beef Market

Authors

Abstract

Price transmission is one of the most important factors that affects the producers, consumers and marketing agents’ welfare. Market structure affects price transmission. Asymmetric price transmission affects the marketing margin, increases marketing agents’ profit and decreases producers and consumers’ welfare. In recent years high prices of beef has caused consumers’ dissatisfaction however, producers have gained not more than 40 percent of retail prices. Asymmetric price transmission is one of the reasons that increases marketing margin and may arise from non-competetive market structure. The objective of this paper is to analyze market structure and the impact of price transmission on marketing margin. To achieve this objective, first;structure, conduct and performance of beef market were analyzed and then marketing margin model was estimated for the 1377-87 period. The results revealed that the share of beef in red meat production has increased but inappropriate spread of slaugther-houses and existence of a large number of middlemen in marketing chain have ended up with non-competitive structure, increasing marketing margin and reduction of beef producers and consumers’ welfare. The results of estimating marketing margin showed that price transmission and marketing cost transmission in Iranian beef market were asymmetric, causing the increase in marketing margin.

Keywords