Vertical Price Transmission on the Iran Lamb Meat Market

In the present paper, it is studied the price relations and how price is transmitted between the producer level and the consumer level for lamb meat. Data used in the research include consumer price index and producer price index for lamb meat covering monthly periods of 91 months since March 2001 through September 2008. Johansen's and Juselius's cointegration method and Granger causality test were used to examine whether there is a relationship between the two indices and to determine causality direction. The behavior of price transmission was analyzed based on the three models of Engle – Granger Error Correction Model (ECM-EG), Threshold Error Correction Model (TECM) and LSE-Henry general to specific model (GETS). The results indicate that there is a long-term relationship between each pair of producer and consumer prices. There is a causality direction from consumer prices to producer prices in both short-term and long-term periods. The results of three models reject the hypothesis of asymmetry in price transmission between producer prices and consumer prices. JEL Classification: A1 Q13 C82