Price Formation of Coffee Beans: New Evidence from the Japanese Market

Tadahiro Nakajima

Abstract


This study tested for Granger causality among international market prices of coffee beans, import prices, retail prices, and other luxury beverage retail prices in Japan. Granger causality was found from the international market price series to the import price series. This indicates that Japan procures coffee beans at a price consistent with the international market price. Granger causality between import prices and retail prices was not observed. This reveals that the import price is not easily passed through to the retail price. In the retail market, Granger causality was detected from instant coffee prices to both coffee bean prices and green tea prices. Green tea prices were observed to Granger-cause black tea prices. This demonstrates that instant coffee is the only substitute good for coffee beans and the price maker in the luxury beverage market.

Full Text: PDF DOI: 10.5430/rwe.v5n2p23

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

Research in World Economy
ISSN 1923-3981(Print) ISSN 1923-399X(Online)

 

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