Price Transmission Processes: A Study of Price Lags and Asymmetric Price Response Behavior for New York Red Delicious and McIntosh Apples

An economic model was developed to gain an understanding of price flows in the markets for New York Red Delicious and New York McIntosh apples. Price transmission processes of two apple products, fresh apples and apple juice, are analyzed and compared. Specific emphasis is placed on evaluating price lags and price asymmetry, two factors which complicate the flow of prices between market levels. Results indicate that retail prices of fresh New York Red Delicious apples and fresh New York McIntosh apples respond more fully to wholesale price increases than wholesale price decreases. Results suggest that wholesale prices of fresh New York Red Delicious and fresh New York McIntosh apples are not determined by shipping point price increases and decreases. Grower price increases and decreases do impact shipping point prices for fresh New York Red Delicious apples. However results are inconclusive for fresh New York McIntosh apples. The results for the apple juice model suggest that forces outside United States apple production, namely increasing imports and increasing efficiency in processing and marketing apple juice, are significant in determining shipping point prices of apple juice.