Asymmetric Pass-Through of Wholesale Price Shocks to Retail Prices: The Case of the Greek Fruits and Vegetables Market

Abstract The objective of this study is to examine the dynamic adjustment of retail prices following changes in input prices within an oligopolistic and vertically non-integrated market. Data are weekly retail and wholesale prices between February 2010 and August 2013. The methodology employed is the Nonlinear Autoregressive Distributed Lag (NARDL) model, which captures both short- and long-run price dynamics. The empirical findings reveal evidence of the “rockets and feathers” hypothesis for more than half of the products examined, indicating an inflationary impact on retail prices, thus a temporal or permanent decrease in consumer welfare. This result is in contrast with the perishable nature of fruits and vegetables.