Recent TRANSFOP Research presented in Barcelona
The first annual meeting of the TRANSFOP research consortium was held in Barcelona in early March with the involvement of more than 20 researchers from around the EU. This was a two-day event: discussions on the first day related to progress in the TRANSFOP research programme and the second day focussed on emerging research issues.
There were a number of presentations on current research, all of which focussed on new investigations into food pricing across the EU. Researchers from CREDA (Spain) and Gottingen (Germany) addressed issues relating to price transmission with preliminary results relating to price changes throughout the supply chain and compared the experience of price transmission across a number of sectors with data from Spain, Germany and Slovenia.
Retail price dynamics in the UK supermarket sector is currently being addressed in joint research between Exeter and Nottingham (UK) and preliminary results were presented at the meeting. The focus of this research is on the idea of “reference prices” which can be defined as the underlying price after sales and other features of short-term pricing are accounted for. One of the main themes arising from this work is the extent of retailer diversity: despite the fact that retailers stock identical products, the pricing strategies of retail prices-as reflected in the behaviour of reference prices-appear to differ quite significantly. One potential implication of this is that the idea of a “representative firm” that often characterises theoretical work in economics is not an accurate characterisation of the how firms actually compete.
Addressing market power was addressed by researchers from Piacenza (Italy). The specific issue addressed here is the role of dynamics. Since many agricultural commodities are storable, this can influence how market participants behave, not just at any one period of time but across time periods. This issue poses several challenges for testing for market power that are potentially more challenging than static models. The Piacenza team used data from the Italian PDO cheese market to explore this issue. A version of this work can also be found in a recent TRANSFOP working paper.
Finally, researchers from Toulouse (France) presented some initial results from their research on price volatility in the French dairy market. One of the issues they are focussing on is the existence of structural breaks; while agricultural markets have long been known to be characterised by price volatility, this volatility is not necessarily constant and can increase over time, for example due to exogenous events on world markets such as the 2007-2008 commodity price spike.
These emerging insights into price behaviour across EU food markets will contribute to a deeper understanding on how food and agricultural markets function across the EU.