4. Econometric analysis of spatial price transmission
The notion of price transmission is used in different contexts in the literature. First of all, some authors test for price transmission within the value chain of a product. For example, it is analyzed if the world price of some commodity is
transmitted to the domestic producers. Other authors are rather interested in the difference of prices between different markets within one country, for example,the so-called spatial price transmission. In this paper, we study spatial price
transmission between the markets for organic and conventional pineapple from Ghana, Côte d’Ivoire and Ghana in the European market. When analyzing price transmission different price series are usually regressed on
each other in order to find a possible relationship between them. For, example,in their study of vertical price transmission in different agricultural markets in Brazil, Aguiar and Santanta (2002) regress the log of retail prices on the log of
farm prices. However, if the time series are non-stationary, it might be the case that a relationship is established even though the series are independent from each other as shown by Cramer and Newbold (1974). In order to avoid these
spurious regressions in case of non-stationarity, many authors have used conintegration techniques to study price transmission and long-run relations