Asymmetric adjustment of retail cod and herring prices in Germany: A NARDL approach

This paper investigates the vertical price transmission among import and retail markets for cod and herring. Monthly data is used for the period January 2012 until December 2016. The nonlinear ARDL approach is applied in order to find short-run and long-run asymmetries in the German cod and herring market. Considerable heterogeneity in short-run adjustment paths is observed, although uncertainty in estimation is large. Magnitude and speed of adjustment at which changes in import prices are passed on to consumer shelves vary across store formats. Overall, the results speak in favor of considerable rigidity at the retail level. The empirical results indicate that, there is long-run price transmission asymmetry in fish monger, supermarkets and discounters in the German cod market. Furthermore, asymmetries in short-run cost pass-through for discounter are found. For the herring market, asymmetries in long-run cost pass-through are also found for monger. In the short run asymmetric cost pass-through for the average retailer and discounter are detected.