Vertical Price Transmission in the Ukrainian Sunflower Oil Supply Chain

Sunflower is one of the most popular and extensively produced crops in Ukraine. Almost all production of sunflower is processed further into sunflower oil. During the last 20 years, the amount of produced and exported Ukrainian sunflower oil have increased markedly, so Ukraine has become the world’s biggest producer of sunflower oil and its exporter. However, due to the increasing industry concentration and rapid sunflower oil price growth starting from mid-2020, the Antimonopoly Committee of Ukraine started its investigation of the sunflower oil supply for the possible competition issues. There are suspicions that there might be a collusion of sunflower oil producers aimed at an artificial price increase. Those concerns have motivated us to study the potential manifestation of market power in the Ukrainian sunflower oil supply chain. For this purpose, the Threshold Autoregressive Cointegration model was estimated, using monthly producer and consumer sunflower oil prices from January 2013 to September 2021. The results of this analysis bring evidence about a long-term cointegration between price pairs. Moreover, there is a noticeably more dynamic price correction for the negative deviations from the long-run equilibrium than for positive deviations.