Asymmetric Price Transmission and Threshold Dynamics in the Philippine Corn Market

Abstract Understanding how price signals are transmitted along agricultural value chains is critical for assessing market coordination and equity, particularly in developing economies. This study analyzes vertical price transmission in the Philippine corn market across farmgate, wholesale, and retail levels using monthly data from 1990 to 2020. Employing both linear and nonlinear econometric approaches – specifically the Threshold Vector Error Correction Model (TVECM) – the analysis identifies cointegrated relationships among prices and reveals asymmetric, threshold-dependent adjustments. Results show that farmgate prices respond strongly to deviations from equilibrium, wholesale prices adjust in a regime-dependent manner, and retail prices remain relatively rigid. These dynamics indicate that price transmission is often sluggish and uneven, reflecting transaction costs, market power disparities, and coordination frictions. Such patterns place a disproportionate adjustment burden on farmers while limiting consumer benefits from falling upstream prices. The findings highlight the importance of policies that improve supply chain integration, strengthen farmer bargaining power, and enhance price monitoring. By focusing on asymmetric transmission and nonlinear adjustments, this study provides new insights into how price relationships shape the performance of the Philippine corn market.