INSTITUTIONS AND PRICE TRANSMISSION IN THE VIETNAMESE HOG MARKET

International Food and Agribusiness Management Review, 2(3/4): 375-390 Copyright © 2001 by Elsevier Science Inc.

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Institutions and Price

Transmission in the

Abstract: This article addresses the issue of whether different
market institutions are accompanied by different degrees of efficiency
and symmetry of price transmission between the producer and retail
levels. It analyzes hog market institutions as they differ between the
North and the South regions of Vietnam. The paper uses a price
asymmetry model including an error correction term to reconcile
potential cointegration relations with symmetry. The analysis shows
that the market is efficient in conveying accurate information, provided
public support institutions are in place.

Introduction

Several recent studies have analyzed the integration of agri-food markets to
determine whether marketing channels convey supply and demand shocks
efficiently, and thus provide the right incentives to producers (Fackler and
Goodwin, forthcoming; Sarker, 1995). The literature on traditional industrial
organization has looked at whether institutional factors play a role in determining
price. However, in Vietnam, there has been no data assembled to analyze either
market integration or market institutions. This paper contributes to the empirical
literature by linking price and institutional analyses focused on the hog market in
Vietnam. We analyze a time series of price data to evaluate the efficiency of the
transmission of supply and demand information in the marketing channel. The
context is postliberalization— characterized by poor contract enforcement mech-

Direct all correspondence to: Katell Le Goulven, INRA ESR, 2 Place Viala, 34060 Montpellier, Cedex 1, France.

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