The Price Relationship between Organic and Non-Organic Vegetables in the U.S.: Evidence from Nielsen Scanner Data

31 Pages Posted: 23 May 2018 Last revised: 27 May 2018

See all articles by GwanSeon Kim

GwanSeon Kim

University of Kentucky - Department of Agricultural Economics

Jun Ho Seok

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Tyler Mark

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Michael R. Reed

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Date Written: January 1, 2018

Abstract

This study investigates price relationships between organic and conventional carrots, tomatoes, and lettuce in the U.S. utilizing Nielsen scanner data from 2006 to 2015. We employ a threshold vector error correction model (TVECM), threshold vector autoregressive model (TVAR), and threshold cointegration test to test whether market integration exists between organic and conventional vegetables as well as the existence of asymmetric price transmission. The results find positive long-run relationships between organic and conventional prices of carrots and tomatoes and show the existence of asymmetric price transmission in price pairs of lettuce and tomatoes. Our findings suggest that the price relationship between organic and conventional vegetables varies by characteristics, such as shelf life and volatility in the price premium. Furthermore, the results indicate that consumers in the U.S. recognize organic and conventional carrots and tomatoes as partially substitutable goods, while U.S. consumers consider organic and conventional lettuces as different goods (no cross-price relationship).

Keywords: asymmetric price transmission, Nielsen scanner data, threshold cointegration test, threshold vector autoregressive model, vector error correction model

JEL Classification: Q10, Q13

Suggested Citation

Kim, GwanSeon and Seok, Jun Ho and Mark, Tyler and Reed, Michael R., The Price Relationship between Organic and Non-Organic Vegetables in the U.S.: Evidence from Nielsen Scanner Data (January 1, 2018). Available at SSRN: https://ssrn.com/abstract=3176082 or http://dx.doi.org/10.2139/ssrn.3176082

GwanSeon Kim (Contact Author)

University of Kentucky - Department of Agricultural Economics ( email )

Lexington, KY
United States

Jun Ho Seok

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

Lexington, KY 40546
United States

Tyler Mark

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

Lexington, KY 40546
United States

Michael R. Reed

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

308 Charles E. Barnhart Bldg.
Lexington, KY 40546-0276
United States
859-257-7259 (Phone)
859-323-1913 (Fax)

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