The influence of scale on the measurement of the vertical price transmission

Measuring vertical price transmission (VPT) has become a widespread means to evaluate the performance of food value chain. To do so, agricultural economists employ time series methods on spatially aggregated data of prices at a regional/ national level. The conclusions of these studies are sometimes used to derive conclusions on the behavior of individual economic agents, e.g. retailers. This is based on a strong (implicit) assumption that the results derived from the studies using aggregated data apply, at least on average, at the disaggregated level. Two main issues could result from this...