Asymmetry in Wholesale-Retail Food Price Transmission in an African Metropolitan Area: The Case of Kinshasa (Zaire)

Abstract

This study presents a new explanation of asymmetric price behavior infood markets based on the presence of transactions costs,and provides evidence from a developing country. Price liberalization can in many cases be insufficient for efficien toperation of African food markets. This is mainly due to the existence of significant transactions costs, caused by deficient infrastructure and information systems. A model based on search costs and kinked demand curves is used to explain asymmetric price behavior in retail markets in Kinshasa (Zaire).