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The price linkages among producer, wholesale and retail marketing channels in US beef markets were evaluated. Threshold cointegration methods were used in the study and a threshold error correction model was developed to measure dynamic time paths of price adjustments to shocks at each level in the marketing channels of US beef. The results showed that transmission of shocks was generally unidirectional. In addition, increased responsiveness to price shocks was noted which suggest the efficient transmission of information through vertical marketing channels.

A simple supply-demand structure of the US dairy industry is used to illustrate the potential role of nonlinear dynamics in causing market instability. The supply function relies on the nonlinear dynamics of the dairy herd, as estimated by J.P. Chavas and R. Klemme, while the demand function shows constant price elasticity. In the absence of any uncertainty, an inelastic demand is shown to contribute to market instability and chaos.