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areas. Public institutions that enhance competition among traders and reduce
collusive behavior thus condition the symmetrical and fluid price shocks trans-
mission in the Southern marketing channel.
Conclusion
The empirical analysis supports a point raised in the institutional analysis: the
difference in the institutional structure of the hog market in Vietnam may have an
impact on its efficiency. In the North, where market institutions are private,
producer prices and retail prices do not exhibit a common long-run equilibrium.
Moreover, price transmission between the producer and the retail levels is
asymmetric. The margin of market intermediaries is corrected more rapidly when
it is squeezed than when it is stretched. In the South, where market institutions are
public, producer prices and retail prices are cointegrated—linked by a common
long-run equilibrium toward which they both converge. Even though changes in
producer prices are not transmitted within one week to retail prices, price
transmission is symmetric. As a consequence, hog and pork prices in the South
allow for supply shocks (climatic shocks, floods, disease) to be transmitted more
efficiently along the marketing channel, thus contributing to the development of
hog production according to market signals. These findings suggest that there
exist more incentives for producers to develop and diversify their production, and
to reduce rural poverty where public institutions and local governments structure
markets in Vietnam. Moreover, it is highlighted that market competition is more
effective where public rather than private support institutions exist. To favor
competition in transition countries, government policy options should consider
enabling conditions for private competition as a means of improving competitive
conditions rather than expect privatization alone to succeed providing the right
economic incentives.
Showing that “institutions matter” is no novelty as donors have acknowledged
it since the Asian Miracle, and praised it in the ensuing Annual Conferences on
Development Economics. In the broad “ institutions matter ” frame of mind, one
might be tempted to transfer the Southern institutional structure of the hog market
to the North. But it would overlook differences in market embeddedness in both
locations. Following national directives, the Ha Noi People’s Committee also
aims at centralizing slaughter to better switch to public plants. Forums are also
organized with traders in an attempt to create wholesale markets in the capital.
However, our survey shows that in Ha Noi, traders have no personal incentive to
work together. In a tradition where disputes are solved in a family or community
context, they do not trust the intervention of a local administration that hardly has
power to enforce new rules. Market efficiency is not only a result of market