Retail margins, price transmission and price asymmetry in urban food markets: The case of Kinshasa (Zaire)

Some African food markets can still seem to operate inefficiently after pri ce liberalisation. This seems mainly due to the existence of significant tr ansaction costs because of small-scale operations, and is influenced by lac k of grading, deficient infrastructure ann information systems. It is shown in the case of retail markets in Kinshasa that search, supervision and oth er difficult-to-measure transactions costs are more important in the margin of food products than the mensurable marketing costs (e.g., storage, trans port). It is also shown through time series analysis that most of the price transmission between wholesale and retail happens in the same week and tha t price asymmetry, i.e., the different transmission of price increases comp ared with price decreases, is present for most products. Products character ised by relatively more standardisation and homogeneity are shown to have l ower retail margins and to behave symmetrically. A model based on kinked de mand curves and search costs might explain this asymmetric price behaviour.