Skip to main content
Article thumbnail
Location of Repository

Empirical Evidences from a Coffee Paradox: An Export Supply/Price Asymmetry Approach

By Hyunsoo Kang and P. Lynn Kennedy


This paper aims to determine the solidity of the notion of the "coffee paradox" using annual data from 1977 to 2007. In the confines of an export supply model, we analyze the effects of export coffee price on export volume. Price and profit equation are used to determine the effects of market power on export coffee price and measure changes in the retail and export price. We also estimate the elasticity of transmission and price asymmetry as a means of verifying the "coffee paradox." Ordinary Least Square (OLS), Instrumental Variables (IV), and simultaneous equation with Seemingly Unrelated Regressions (SUR) methods of econometric analysis are employed. Empirical results suggest that the world coffee market is characterized by "coffee paradox" due to different changes between retail and export prices of coffee, and that it is the existence of market power in importing countries that is the main contributor to the condition of price asymmetry.export supply model, coffee paradox, elasticity of transmission, price asymmetry, price equation, profit equation, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, International Relations/Trade,

OAI identifier:
Downloaded from

Suggested articles


  1. (1991). After the Break up.”
  2. (1977). An Approach to Specifying and Estimating Nonreversible Function.”
  3. (1962). An Efficient Method of Estimating Seemingly Unrelated Regressions and Tests for Aggregation
  4. (1990). Analysis.
  5. (2002). Asymmetry in Farm to Retail Price Transmission: Evidence from
  6. (1987). Asymmetry in Farm-Retail Price Transmission for Major Diary Products.”
  7. (1987). Cointegration and error-correction: Representation, estimation, and testing,”
  8. (1998). Crude Oil and Gasoline Prices: Asymmetric Relationship?” Economic Review of Federal Reserve Bank of Dallas.
  9. (2001). Econometric Analysis of Cross Section and Panel Data.
  10. (1992). On the Transmission of World Agricultural Empirical Evidences from a Coffee Paradox: An Export Supply/Price Asymmetry Approach 137 Prices.” The World Bank Economic Review
  11. (1988). Price Asymmetry in the U.S.
  12. (2005). The Coffee Paradox. London and
  13. (2007). The Economics of Fair Trade Coffee: For Whose Benefit? An Investigation into the Limits of Fair Trade as a Development Tool and the Risk of Clean-Washing.” HEI Working Paper.
  14. (2004). The Impact of Coffee Market Reforms on Producer Prices and Price Transmission.” The World Bank Policy Research Working Paper 3358.
  15. (1998). Unfair Trade? Empirical Evidence in World Commodity Markets over the Past 25 Years.” The World Bank Economic Review

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.