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Soc. Sci. 2019, 8(3), 87; https://doi.org/10.3390/socsci8030087

Modelling Price Transmission within the Supply Chain under a European Protected Designation of Origin Framework: The Case of Parmigiano Reggiano in Italy

1
Applied Mathematics and Statistics, University CEU San Pablo, 28003 Madrid, Spain
2
Department of Economics and Management, University of Parma, 43125 Parma, Italy
3
CREDA-UPC-IRTA, 08860 Castelldefels, Spain
*
Author to whom correspondence should be addressed.
Received: 27 January 2019 / Revised: 28 February 2019 / Accepted: 4 March 2019 / Published: 8 March 2019
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Abstract

Lately, we have witnessed how European Institutions have directed many efforts at improving the effectiveness of food quality schemes (FQS) to address the increasing complexity that has affected all elements of the operating structure of agrifood supply chains worldwide, especially prices. In this paper, we conduct a comparative analysis of the price transmission process in the dairy sector between farm and retail markets within the protected designation of origin (PDO) framework and its non-protected counterpart in Italy. This paper considers a unique dataset for the PDO Parmigiano Reggiano cheese and for a non-protected counterpart in Italy covering a recent period after the price crises that took place nearly a decade ago. A multivariate error correction type approach was estimated together with the corresponding impulse response functions to provide useful insights for understanding the differences in the performance of the price transmission process between protected and non-protected food products. Contrary to most of the previous literature, our results support the hypothesis of symmetric price dynamics along the PDO cheese supply chain. The fewer number of farmers reduces the market power at the retail level generating more efficient price transmission dynamics. Short-run dynamics suggest that in the PDO cheese market farmers and retailers react quicker and with a similar magnitude to market changes, while in the conventional cheese market, retailers benefit in the short run from quicker and of higher magnitude responses to unanticipated market shocks. View Full-Text
Keywords: price transmission; protected designation of origin; supply chain; applied econometrics; error correction type model; differentiation; market power price transmission; protected designation of origin; supply chain; applied econometrics; error correction type model; differentiation; market power
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Ferrer-Pérez, H.; Arfini, F.; Gil, J.M. Modelling Price Transmission within the Supply Chain under a European Protected Designation of Origin Framework: The Case of Parmigiano Reggiano in Italy. Soc. Sci. 2019, 8, 87.

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