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Abstract

By combining data from multiple sources, we model supply and demand of strawberry in Mexico for the 1970-2013 period. The main purpose of the study is to measure transmission of prices in this sector. Producer prices, wholesaler prices, exporter prices, and consumer prices are components of the model. Our three-stage least squares regression results show, consistent with the literature, that the pass-through of price changes is imperfect; that is, a price change at the producer level is not fully transmitted to domestic consumers and exporters. (Dickey-Fuller Augmented and Ljung-Box tests were performed to ensure efficiency of estimators.) Furthermore, a change in producer prices has a higher impact on the domestic market than in the exports market, in percentage basis. However, higher price mark-ups in the export market compared to domestic market’s make exporting more attractive to Mexican strawberry producers. Results of this study may have important implications as both supply and exports of strawberry from Mexico have experienced high growth in the last decade, with more than 90% of strawberry being exported to the U.S. According the Mexican Department of Agriculture, volume harvested of strawberry grew 2.14 times from 2003 to 2014 while exports did 2.88 times.

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