ABSTRACT
What is the relationship between changes in raw cotton prices and retail prices for cotton products? The paper provides a statistical examination of cotton-related prices at three different points in the manufacturing/retail pipeline. The results of simple linear regression models suggest that the relationship between mill-delivered prices and yarn prices, and between yarn prices and retail prices for apparel products is weak. One explanation for the finding is the idea that the apparel market is strongly driven by consumer demand and that changes in key input prices, while statistically significant, are of minor importance when compared to other market factors.
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