SAGE Publications Los Angeles/London/New Delhi/Singapore/Washington DC DOI: 10.1177/097380101200600302 Asymmetric Price Transmission of Palm Oil: Comparison between Malaysia and Indonesia

This paper econometrically analyses the profi tability of Malaysia and Indonesia in export-ing crude palm oil (CPO) and refi ned palm oil (RPO) by estimating asymmetric price transmission using a cointegration threshold autoregressive (TAR) model. The empirical results show that Malaysia’s profi t was larger than that of Indonesia from 1989 to 2009, that Malaysia enjoyed excess profi t over Indonesia in the food system where Malaysia imports CPO from Indonesia and exports RPO to Indonesia and that exporters may not be able to extract excess profi ts over the emerging and developing countries such as China, India, Pakistan and the ASEAN, due to the existence of a variety of substitutes for cooking oil