This study examines the price linkages between producer (farm gate raw milk) and retail prices of five dairy consumer products in the Turkish Dairy Markets. A non-linear ARDL approach is used to monthly price data for the period from January 2003 to January 2017 examine the separate effects of the short-run and long-run dynamics for five dairy products. Short run asymmetry is found in four out of the five analysed products. The estimation results confirms that, as raw milk is processed and converted into high-value and easily transportable dairy products with long shelf-lives, and also the degree of marketing through retail channels are increased, the strength of the short-term asymmetry also increases, thus resulting in stronger asymmetric adjustment. In the short run, the found asymmetry could be addressed to market power arising from increased concentration in the collection/processing/retail levels. The results also highlight an important issue that, as value added transformation increases, the linkage between the raw milk and the end products could be weakened.
Key words: Keywords: Turkish dairy market, non-linear ARDL, asymmetric price transmission. Jel Codes: Q11, C32. Article Language: EnglishTurkish
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