What is it about?
Milk prices vary across European countries, but do they move together? This study examines how milk prices are transmitted across different EU countries and whether trade plays a role in keeping prices aligned. The research tests the Law of One Price, which suggests that in well-connected markets, price differences should reflect only transportation and trade costs. The findings show that factors like trade volume, distance, and being part of the Eurozone influence price transmission. The study highlights the importance of market integration and trade policies in ensuring fair and stable milk prices across Europe.
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Why is it important?
ChatGPT This study is unique because it examines spatial price transmission in the European dairy sector, an area with limited research. Using advanced econometric methods, it tests whether milk prices across EU countries follow the Law of One Price, meaning that price differences only reflect transportation and trade costs. The findings are timely as EU agricultural policies evolve and market integration deepens. Understanding how trade, distance, and Eurozone membership impact price transmission can help policymakers and businesses improve market efficiency. This research provides valuable insights for ensuring fair pricing, stable markets, and better trade policies in the dairy sector.
Perspectives
This study particularly exciting because it sheds light on how integrated the European dairy market truly is. While price transmission is often assumed to work efficiently, our findings suggest that trade, distance, and currency play crucial roles in shaping milk prices. This research is especially relevant as the EU continues to refine agricultural policies and trade agreements. I believe these insights can help policymakers and industry stakeholders make better-informed decisions to enhance market stability and fairness. Understanding these dynamics is essential for ensuring a competitive and well-functioning dairy sector across Europe.
Professor Imre Fertő
Eotvos Lorand Tudomanyegyetem
Read the Original
This page is a summary of: Spatial Price Transmission and Trade in the European Dairy Sector, Agris on-line Papers in Economics and Informatics, June 2019, Czech University of Life Sciences Prague,
DOI: 10.7160/aol.2019.110202.
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