PRODUCT CHARACTERISTICS AND ARBITRAGE IN THE AUSTRALIAN AND NEW ZEALAND WOOL MARKETS

The physical characteristics of wool are important determinants of its spinning properties, yarn quality and end use. The degree to which wools from different countries of origin may be substituted has important implications for the domestic marketing policies of Australia and New Zealand. The hypothesis examined in this paper is that the differences in wool prices can be explained by differences in the physical characteristics of the wool and that objective measures of these characteristics allow for effective arbitrage between these markets. The alternative hypothesis is that premiums or discounts exist owing to country of origin. A hedonic price analysis was conducted on wool prices in Australia and New Zealand using a balanced sample of sale lot data from the 1986-87 selling season. In the year examined, there was no evidence of any price premiums associated with country of origin.


Issue Date:
1990-04
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/22501
Published in:
Australian Journal of Agricultural Economics, Volume 34, Number 1
Page range:
67-79
Total Pages:
13




 Record created 2017-04-01, last modified 2017-08-24

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