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Distinguishing between Equilibrium and Integration in Spatial Price Analysis

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Author Info
Barrett, Christopher B
Li, Jau Rong

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Abstract

This article introduces a new spatial price analysis methodology based on maximum likelihood estimation of a mixture distribution model incorporating price, transfer cost, and trade flow data. This method permits differentiation between market integration and competitive market equilibrium and derivation of intuitive measures of intermarket tradability, competitive market equilibrium, perfect integration, segmented equilibrium, and segmented disequilibrium. One can also use these estimates to derive semiparametric measures of time-varying regime probabilities to track changing market conditions. An application to trade in soybean meal among Pacific Rim economies demonstrates the usefulness of the method. Copyright 2002 by American Agricultural Economics Association

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Article provided by American Agricultural Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 84 (2002)
Issue (Month): 2 (May)
Pages: 292-307
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Handle: RePEc:bla:ajagec:v:84:y:2002:i:2:p:292-307

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  19. van Campenhout, Bjorn, 2005. "Modelling Trends in Food Market Integration: Method and an Application to Tanzanian Maize Markets," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24718, European Association of Agricultural Economists. [Downloadable!]
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  20. Andrew Coleman, 2007. "The pitfalls of estimating transactions costs from price data: evidence from trans-Atlantic gold-point arbitrage, 1886-1905," Reserve Bank of New Zealand Discussion Paper Series DP2007/07, Reserve Bank of New Zealand. [Downloadable!]
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  22. Fausti, Scott & Diersen, Matthew, 2005. "Price Transparency in the Voluntary Price Reporting System for Live Cattle: Theory and Empirical Evidence from South Dakota," Staff Papers 050001, South Dakota State University, Department of Economics. [Downloadable!]
  23. Liefert, William, 2007. "Decomposing Changes in Agricultural Price Gaps," Working Papers 14576, International Agricultural Trade Research Consortium. [Downloadable!]
  24. Mutambatsere, Emelly & Christy, Ralph D., 2008. "Market Integration and Efficiency in the Presence of Cross-border Trade Restrictions: Evidence from selected Maize Markets in Southern Africa," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6304, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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