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Market Integration and Transport Costs in France 1825-1903: A Threshold Error Correction Approach to the Law of One Price

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  • Ejrnaes, Mette
  • Persson, Karl Gunnar

Abstract

This paper argues that the appropriate standard for the analysis of commodity market integration is the transport cost adjusted law of one price. A threshold error correction model that incorporates that property is developed and applied to French wheat prices in the 19th century. This type of modelling acknowledges the fact that error corrections only take place when price differentials between markets exceed transport costs. The method used generates more accurate estimates of the adjustment speed to eqilibrium price differentials between markets and transport costs, which turn out to have a good fit with observed costs. Unlike previous studies this paper shows that French wheat markets were well integrated by the middle of the 19th century.

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Bibliographic Info

Article provided by Elsevier in its journal Explorations in Economic History.

Volume (Year): 37 (2000)
Issue (Month): 2 (April)
Pages: 149-173

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Handle: RePEc:eee:exehis:v:37:y:2000:i:2:p:149-173

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Web page: http://www.elsevier.com/locate/inca/622830

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Cited by:
  1. Lampe, Markus, 2009. "Effects of Bilateralism and the MFN Clause on International Trade: Evidence for the Cobden-Chevalier Network, 1860-1875," The Journal of Economic History, Cambridge University Press, vol. 69(04), pages 1012-1040, December.
  2. Guillaume Daudin, 2007. "Domestic trade and market size in late eighteenth century France," Sciences Po publications n°2007-35, Sciences Po.
  3. Rafael Dobado-González & Alfredo García-Hiernaux & David Guerrero-Burbano, 2013. "West versus East: Early globalization and thr great divergence
    [Oeste frente a Este: Globalización temprana y gran divergencia]
    ," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 13-08, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
  4. Rafael Dobado González & Gustavo A. Marrero, 2004. "Corn Market Integration in Porfirian Mexico," Documentos de Trabajo del ICAE 0402, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
  5. Federico, Giovanni, 2007. "Market integration and market efficiency: The case of 19th century Italy," Explorations in Economic History, Elsevier, vol. 44(2), pages 293-316, April.
  6. Angela Milena Rojas Rivera, 2007. "Cliometría: Una comunidad científica en el pseudo-mercado del conocimiento (1957-2006)," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 66, pages 47-82, Enero-Jun.
  7. repec:spo:wpecon:info:hdl:2441/2241 is not listed on IDEAS
  8. Cormac Ó Gráda, 2002. "Adam Smith and Amartya Sen - Markets and Famines in Pre-Industrial Europe," Working Papers 200218, School Of Economics, University College Dublin.
  9. Brunt, Liam & Cannon, Edmund, 2013. "Integration in the English wheat market 1770-1820," Discussion Paper Series in Economics 12/2013, Department of Economics, Norwegian School of Economics.

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  1. Historical Economic Geography

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