Price Caps, Retail Margins and Pork Price Transmission in Hungary

ABSTRACT This paper examines vertical price transmission in the Hungarian pork‐leg supply chain during a period of high food inflation and intensive retail‐market intervention. Using weekly data from 2021w7 to 2026w19, we distinguish two directly linked market pairs: producer‐to‐retail procurement and retail procurement‐to‐consumer. Baseline ARDL estimates show strong upstream pass‐through, with a long‐run elasticity of 0.785 from producer to procurement prices, but much weaker downstream pass‐through, with an elasticity of 0.275 from procurement to net consumer prices. Policy‐regime estimates, supported by Newey‐West HAC‐robust inference, indicate that the food‐price‐cap‐only period coincided with sharply compressed downstream pass‐through, while upstream transmission remained substantial. Nonlinear ARDL and threshold diagnostics do not support a robust long‐run asymmetry interpretation. The findings suggest that incomplete pork‐leg price transmission in Hungary was concentrated mainly at the consumer‐facing retail‐pricing stage, rather than reflecting uniformly weak transmission along the entire supply chain.