Spatial Price Transmission, Transaction Costs, and Econometric Modelling and Modelling Salmonella Spread in Broiler Production

Abstract

Transaction costs are major determinants of price transmission across space and must be accounted for when modelling price transmission. This article contributes to literature by evaluating the impact of not properly accounting for transaction cost variation on price transmission parameters using a Monte Carlo experiment and a real world application. We show that when transaction costs are variable and nonstationary, threshold vector error correction models assuming fixed thresholds provide biased inference, while the flexible threshold specification accounting for transaction cost variation is able to provide unbiased estimates on market performance indicators.

In the second essay, we identify determinants and control strategies for Salmonella in broiler production. The presence of Salmonella spp. in broiler production is a concern as the bacterium can be transmitted to humans via contaminated meat and derived products. A longitudinal study using official results of Salmonella spp isolation from drag swabs collected at the end of the grow-out period was performed to determine risk factors related to farm and broiler house characteristics and management practices, as recorded by a Brazilian integrated broiler enterprise. A Bayesian hierarchical spatio-temporal model revealed significant spatial and time influence and significant effects of size of broiler house and total housing area per farm, type of broiler house and litter recycles on the odds of isolating Salmonella spp from litter, allowing the implementation of measures to reduce the risk of persistence of the bacterium in the broiler production chain. We find evidence of a principal-agent problem while setting strategies to control the bacteria in litter and suggest the adoption of incentives aiming to reduce prevalence in the integrated enterprise. The possibility of implementing optimal control measures by extending recorded data is discussed.