WHY HAS POLAND AVOIDED THE PRICE LIBERALIZATION TRAP - THE CASE OF THE HOG-PORK SECTOR

Price liberalization in the agrifood economy in the transition economi es is likely to slip into a trap: food prices rocket up, consumption d eclines, but food supply does not catch up and even contracts. However , during the transition period following the 1989 price liberalization , the Polish hog-pork sector succeeded in avoiding this trap. By condu cting market structure and econometric analysis, this article looks fo r the reasons for this success. In the Polish hog-pork sector the rest ructuring of state-owned enterprises and the emergence of private firm s introduced an effective price transmission mechanism between the pro cessing-retailing and farm levels. This mechanism allowed farm supply to respond to changed demand and to rake advantage of increased retail prices. Such a relatively efficient marketing system was made possibl e by a relatively stable macroeconomic environment and limited governm ent intervention.