ABSTRACT
Chapters 2 through 5 of this textbook have focused on the price of a single commodity with different space, time and quality attributes. This chapter examines pricing linkages for different commodities in the same location and at the same point in time. An example of a multiple commodity price linkage involves hogs, cattle and feed grains. When news about the potential seriousness of swine flu became public in April 2009, the price of hogs decreased, the price of cattle increased and the price of feed grains decreased. These changes occurred because market traders believed that consumers would substitute beef for pork in their consumption decisions and that the overall demand for feed grains would decrease. In this particular example the price linkages are both horizontal (e.g., cattle and hogs) and vertical (e.g., feed grains and hogs). This chapter focuses on horizontal price linkages and Chapters 7 focuses on vertical price linkages.
