An Analysis of Asymmetry in Para Rubber Price Transmission in Thailand
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Abstract
The objectives of this research were to analyze Para rubber price transmission and test for asymmetry in price transmission and adjustment toward long run equilibrium among rubber markets. Daily rubber prices used in the analysis were SICOM rubber futures, export, wholesale, and local market prices. The prices were obtained from SICOM, Rubber Authority of Thailand and Hatyai Central Rubber Market from 1st January 2011 to 31st December 2016. The data were analyzed using Cramon-Taubadel and Loy error correction model. The results indicated that wholesale and local prices reacted faster on price decrease than price increase to the change from the futures and export markets. On the other hand, local price reacted faster on price decrease than price increase to the change from wholesale market. Long run estimation revealed that exporters exerted market power over wholesalers and farmers. The findings revealed the presence of asymmetric price transmission in Thailand rubber markets. This research found that exporters’ market power and market inefficiency led to losses in farmers’ income.
Keywords: 1) Asymmetric Price Transmission 2) Rubber Markets 3) Time Series Analysis
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