Analyzing Price Transmission in Pistachio World Market

Iran accounts for more than 50 percent of pistachio world market, having a leading role in price formation process of pistachio in international market. The objective of this study is to investigate the price transmission pattern between domestic and world markets of pistachio. Regarding the applied dataset analyses were performed in two parts of time series (1972-2005) and panel data (1989-2005). Examination of causality between domestic and world prices showed a long run reciprocal relation between them. Analyses based on the times series data showed a long run symmetric price transmission in both of domestic and world markets. However, price transmission pattern was found asymmetric in short run, showing a more rapid and perfect transmission of price decrease as compared to price increase. Based on the results, increase in Iran’s share in world market may lead to increase in magnitude of price transmission to domestic market. The panel estimation results showed that changes in combination of Iranian pistachio importing countries in form of reduction in their multiplicity and increase in their market share as well as reduction in Iran’s market share has resulted in symmetric price transmission between domestic and world markets. Estimation of price transmissions showed that domestic market response to world prices is more considerable than world market prices to domestic ones.

JEL Classification: M31, E64