Vertical Price Transmission in the China's Layer Industry Chain:an Application of FDL Approach

This paper examines the vertical price relationship between upstream and downstream products in China＇s layer industry chain by estimating elasticity coefficients of the price transmission. We use cointegration tests, error correction models and finite distributed lag models to analyze vertical price shifts between corn, layer feed, egg-laying chicken and egg prices. With monthly data from 1994 to 2010, our results show that various prices in China＇s layer industry chain are well integrated. In addition, our results indicate that both long-run and short-run price relationships between upstream and downstream products in layer industry chain exist and the long-run equilibrium, to a certain extent, may eliminate the short-run dynamics price deviation. We also found that the influence of corn and feed prices on egg prices is still more remarkable than egg-laying chicken prices. Our findings imply that governments should pay more attention to corn and layer feed prices in order to stabilize egg prices under the conditions of market integration.

Asymmetric Price Transmission and Structural Breaks in the Relationship between Costa Rican Markets of Livestock Cattle, Beef and Milk

The vertical price transmission is generally considered as the relationship between two markets of the same production chain However, we can expand this concept to another relation which has not been deeply investigated： the joint products. They are the products which are produced in a single production process, but not correspond to the same chain. An especial case is the beef and milk markets in Costa Rica. Even if these products usually correspond to disconnect chains, in Costa Rica farms make use of cattle to produce both meat and milk. The cointegration framework is applied in order to indentify the price transmission among these markets. In addition, the asymmetric behavior and structural breaks are taken into account. Price transmission between each market pair was found. First, the cattle prices adjust in the milk-cattle relationship, second, beef meat prices adjust in the cattle-beef meat and in the milk - beef meat relationship. Finally, the equations allowing for structural breaks affect the estimates in the following three ways： after the break the elasticities became higher than 1, there is more evidence of cointegration, and the adjustment coefficients are significant only when a change in the long run is allowed.

Game-theoretical Models of a Two-echelon Supply Chain Involving Two Substitutable Products

This paper considers tripartite pricing issues in a two-echelon supply chain involving duopolistic manufacturers and a single retailer.Firstly,a tripartite competitive model is conducted,in which both a Stackelberg game and a Bertrand game occur simultaneously.It is shown that the manufacturer who possesses a higher sales quantity gains more profits than the other one.Secondly,a definition of optimal vertical pricing alliance is proposed when cooperation exists between the retailer and some manufacturer.We conduct two-player games when partial cooperation exists among the three participants.It is demonstrated that the total profit of the alliance is higher than the sum profit of the corresponding two participants in the tripartite competition model,and meanwhile the profit of the manufacturer who is not in the alliance suffers a loss.Further,a criterion is given to judge which manufacturer the retailer will choose to cooperate in order to maximize the total increased profits.From the perspective of game theory,we examine the stability of the vertical alliance with considering the dominance of the retailer.Finally,a numerical illustration is designed to examine the judging criteria of which manufacturer is the member of the optimal alliance under different potential market demands.