Energy‐milk price transmission at the product brand level |
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Authors: | Xun Li Shuai Yang |
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Affiliation: | 1. School of Economics and Management, Wuhan University, Luojia Hill, Wuhan, China;2. Glorious Sun School of Business and Management, Donghua University, Shanghai, China |
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Abstract: | This article estimates the pass‐through rates between diesel fuel and retail milk prices at the product brand level. Using a random coefficient logit demand model and taking the direct and indirect impacts of energy prices, this research identifies changes in pass‐through rates before and after the great recession in 2008. Empirical results show that diesel prices significantly impacted the retail prices of milk products and are an important determinant of food price inflation. Pass‐through rates are estimated to range from 0.16 to approximately 0.60 through 2008 with an average of 0.22 for the whole period. Statistical tests indicate that pass‐through rates before June 2008 were significantly higher than after June 2008 when they dropped significantly to 0.04 to 0.17. Interestingly, private label brands have the lowest pass‐through rates, implying that compared to manufacturer brands, private label prices are more insulated from diesel price shocks. |
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Keywords: | D22 L66 Q13 Q41 Food Milk Energy Pricing Pass‐through Manufacturer brands Private label brands |
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