PRICE TRANSMISSION IN THE INDONESIAN RED CHILI MARKET STATIC AND DYNAMIC MODELS
Abstract
The problem that often arises in agricultural commodities is the transmission of price changes at the consumer level and at the producer level. This study aims to empirically test the transmission of red chili prices using static and dynamic models. The data used is a weekly series from January 1, 2017, to November 21, 2020. The results show that the red chili price transmission is symmetrical, where price transmission between consumers - producers is perfect. The increase and decrease in the retail price of red chili will be followed by an increase and decrease in the producer price of red chili. The red chili market is a competitive market, so government intervention is not needed to control prices, but must always be monitored to maintain a perfect market mechanism. Preparation of the food balance, projections of production and demand for red chili, improvement of distribution channel infrastructure and price information systems are strategies to anticipate price fluctuations and failure of market mechanisms.
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References
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Trotter, B. W. (1992). Applying Price Analysis to Marketing System: Methods and Examples from the Indonesian Rice Markets. Marketing Series Volume 3. Chatham. Natural Research Institute. pp. 15-49.
Von Cramon-Taubadel, S. (1999). Estimating Asymmetric Price Transmission with the Error Correction Representation: An Application to the German Pork Market. Eur. Review. Agricultural. Economic. Vol.25, pp: 1-18.
Ward, R. W. (1982). Asymmetry in Retail, Wholesale and Shipping Point Pricing for Fresh Vegetables. American Journal Agricultural Economic. Vol.62, pp: 205-212.
Willett, L. S., Hansmire M. R. and Bernard, J. C. (1997). Asymmetric Price response Behavior of Red Delicious Apples. Agribusiness. Vol.13, pp: 649-658.
Yuniarti, D., E. S. Rahayu and M. Harisudin. (2018). Analysis of Market Integration and Price Transmission from Grain to Organic Rice of Boyolali. Jurnal Pangan. Vol. 27 pp: 97-106.
Zhang, P., Fletcher, S. and Carley, D. (1995). Peanut Price Transmission Asymmetry in Peanut Butter. Agribusiness. Vol.11, pp: 13-20.
Aguiar, D. R. D. and Santana, J.A. (2002). Asymmetry in Farm to Retail Price Transmission: Evidence from Brazil. Agribusiness. Vol.18, pp: 37-48.
Arnanto., S. Hartoyo and W. Rindayati. (2014). Analysis of Spatial Market Integration of Food Commodity in Indonesia. Jurnal Ekonomi dan Kebijakan Pembanguan. Vol.3, pp: 136-157.
Bacon, R. W. (1991). Rockets and Feathers: The Asymmetric Speed of Adjustment of UK Retail Gasoline Prices to Cost Changes. Energy Econ. Vol.13, pp: 211-218.
Bailey, D. and Brorsen, B. W. (1989). Price Asymmetry in Spatial Fed Cattle Market. Western J. Agric. Econ. Vol.14, pp: 246-252.
Conforti, P. (2004). Price Transmission in Selected Agricultural Markets. (Working Paper 7-03). FAO Commoditiy and Trade Policy Research.
Delpachitra, S. B. and R. L.S. Hill. (1994). The Law of One Price: A Test Based on Prices for Selected Inputs in New Zealand Agriculture. Agricultural Economics. Vol.10, pp:297-305
Dickey, D. and Fuller, W. (1979). Distribution of the Estimators for Autoregressive Time Series with a Unit Root. Journal of the American Statistical Association. Vol.366 pp:427-431.
Erviana, V., Y. Syaukat and A. Fariyanti. (2020). Analysis of Price Transmission Big Red Chilli in West Java Province. Jurnal Ekonomi Pertanian dan Agribisnis. Vol.4, pp: 77-86
Ganneval, S. (2016). Spatial Price Transmission on Agricultural Commodity Markets under Different Volatility Regimes. Economic Modelling. Vol.52, pp:173-185.
Ghoshray, A. (2011). Underlying Trends and International Price Transmission of Agricultural Commodities. (Working Paper 257). ADB Economics.
Henderson, J. M. and R. E. Quant. (1980). Microeconomics Theory: A Mathematical Approach. Third Edition. International Student Edition. McGraw-Hill Book Company. Singapura. pp: 145-169.
Heytens, P. J. (1986). Testing Market Integration. Food Research Institute Studies. Vol.20, pp: 34-49.
Houck, J. P. (1977). An Approach to Specifying and Estimating Nonreversible Functions. Am. J. Agric. Econ. Vol.59, pp: 570-572.
Kinnucan, H. W. and Forker, O. D. (1987). Asymmetry in Farm-Retail Price Transmission for major Dairy Products. Am. J. Agric. Econ. Vol.69, pp:285-292.
Mengel, C. S. and S. von Cramon Taubadel. (2014). Distance and Border Effects on Price Transmission: A Meta-Analysis. (Working Paper 37). Global Food Discussion Papers.
Meyer, J. and S. von Cramon-Taubadel. (2002). Asymmetric Price Transmission: A Survey. Paper prepared for presentation at the xth EAAE Congress ‘Exploring Diversity in the European Agri -Food System’, Zaragoza. Spain. 28-31 August 2002.
Meyer, J. and S. von Cramon-Taubadel. (2004). Asymmetric Price Transmission: A Survey. Journal of Agricultural Economics. Vol.55, pp: 581-611.
Miftahuljanah, K. Sukiyono and P. S. Asrian. (2019). Chili Price Volatilities and Transmisions at Vertical Markets in Bengkulu Province. Jurnal Agro Ekonomi. Vol. 38, pp: 29-39.
Mohanty, S., Peterson, E. W. F. and Kruse, N. C. (1995). Price Asymmetry in the International Wheat Market. Canadian J. Agric. Econ.Vol.43 pp: 355-366.
Nuraeni, D., R. Anindita and Syafrial. (2015). Analysis of Price Variation and Shallot Market Integration In West Java. Habitat. Vol.26, pp: 163-172.
Peltzman, S. (2000). Prices Rise Faster Than They Fall. J. Polit. Econ. Vol.108, pp: 466-502.
Ruslan, Januar, A., M. Firdaus and Suharno. (2016). Asymmetric Price Transmission in Supply Chain of Shallot and Its Relationship with Import in Indonesia: A Case Study in Brebes and Jakarta. Buletin Ilmiah Litbang Perdagangan. Vol.10, pp:103-128
Sahara., M. H. Utari and Z. Azijah. (2019). Volatility Price of Shallot in Indonesia. Buletin Ilmiah Litbang Perdagangan. Vol.13, pp: 309-335.
Sukmawati D. (2015). Pembentukan Harga Cabai Merah Keriting (Capsicum Annum L) dengan Analisis Harga Komoditas di Sentra Produksi dan Pasar Induk. Suatu Kasus Pada Sentra Produksi Cabai Merah Keriting di Kecamatan Cikajang, Pasar Induk Gedebage, Pasar Induk Caringin dan Pasar Induk Kramat Jati. Mimbar Agribisnis. Vol.1 No. 1, pp: 79-84.
Trotter, B. W. (1992). Applying Price Analysis to Marketing System: Methods and Examples from the Indonesian Rice Markets. Marketing Series Volume 3. Chatham. Natural Research Institute. pp. 15-49.
Von Cramon-Taubadel, S. (1999). Estimating Asymmetric Price Transmission with the Error Correction Representation: An Application to the German Pork Market. Eur. Review. Agricultural. Economic. Vol.25, pp: 1-18.
Ward, R. W. (1982). Asymmetry in Retail, Wholesale and Shipping Point Pricing for Fresh Vegetables. American Journal Agricultural Economic. Vol.62, pp: 205-212.
Willett, L. S., Hansmire M. R. and Bernard, J. C. (1997). Asymmetric Price response Behavior of Red Delicious Apples. Agribusiness. Vol.13, pp: 649-658.
Yuniarti, D., E. S. Rahayu and M. Harisudin. (2018). Analysis of Market Integration and Price Transmission from Grain to Organic Rice of Boyolali. Jurnal Pangan. Vol. 27 pp: 97-106.
Zhang, P., Fletcher, S. and Carley, D. (1995). Peanut Price Transmission Asymmetry in Peanut Butter. Agribusiness. Vol.11, pp: 13-20.
Published
2022-08-18
How to Cite
SITEPU, Rasidin Karo Karo.
PRICE TRANSMISSION IN THE INDONESIAN RED CHILI MARKET STATIC AND DYNAMIC MODELS.
Jurnal Ekonomi Kuantitatif Terapan, [S.l.], p. 217-224, aug. 2022.
ISSN 2303-0186.
Available at: <https://ojs.unud.ac.id/index.php/jekt/article/view/87721>. Date accessed: 26 apr. 2024.
doi: https://doi.org/10.24843/JEKT.2022.v15.i02.p04.
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