The Vietnamese Hog Market
381
and trust that actors are building. Segregation exists in such a system, as actors
will preferentially interact with people from the same commune, group, or family.
The social functioning of the South is closer to the individualistic system
characterized by the importance of bilateral reputation.
The differences in market structures and institutions may lead to differences in
price formation along the marketing chain, and therefore to differences in the
efficiency of market signal transmission between producers and consumers.
Intermediaries in the marketing chain may exert some power in price formation so
that production (consumption) price increases (decreases) are passed on to
consumers (producers) more rapidly and perhaps more completely than produc-
tion (consumption) price decreases (increases). The market is then said to be
asymmetric and intermediaries are in a position to capture rents. We test this
hypothesis by evaluating the impact of alternative institutions—private and
informal in the North and public and formal in the South, as to their efficiency of
price transmission along the hog marketing chain.
Method
The question of whether there is symmetric response to price changes in markets
is not new in the agricultural economics literature. Most studies have focused on
vertical price relationships in the commodity marketing channels of developed
countries. Boyd and Brorsen (1996) found no evidence of asymmetry in the U.S.
pork marketing channel. Punyawadee et al. (1991) report limited short-run
asymmetry between pork markets in Ontario and Alberta. von Cramon-Taubadel
(1998) demonstrates that transmission between producer and wholesale pork
prices in northern Germany is asymmetric. Few of this sort of study have been
conducted in developing countries where access to price information is difficult.
To address the question of price transmission, Wolffram (1971) and Houck
(1997) developed a method based on a simple price asymmetry model:
ODPr,t 5 b0 1 b1 ODPp1,t 1 b2 ODPp2,t 1«t
(1)
t51 t51 t51
where DPr,t, DP1p,t and DP1p,t are the price changes for retail pork in the urban
area, the positive price changes for live hogs in the rural area, and the negative
price changes for live hogs in the rural area at time t respectively, b0, b*, and b2
are coefficients, t is the current time period and et the error term. Asymmetry is
tested by determining whether b1 5 b2. Boyd and Brorsen (1988) modified (1)
and made it dynamic using lagged prices to test for both price asymmetry and the
speed of price adjustment. If we call PRt, PPPt, and NPPt, the values of SDPr,t,