Assessing a feasible degree of product market integration: a pilot analysis
AbstractPurpose – This paper aims to make a preliminary estimate of the degree of integration in the US product market (widely acknowledged to be the most integrated among geographically large economies) as an upper bound of spatial integration that is practically achievable in markets covering fairly large territories. Design/methodology/approach – The approach takes the form of an econometric model derived from the fact that local price of a tradable good should not be dependent on local demand under the law of “one price is a tool to measure market integration”. It is applied to data on the cost of a grocery basket and prices for three individual goods in 2000 across 29 US cities. Findings – The regression results suggest that the US market is not perfectly integrated. Thus, the estimated degree of its integration can be deemed, indeed, as a feasible maximum. Applying this benchmark to the European part of Russia in 2000, its degree of market integration turns out to be comparable – by the order of magnitude – with the feasible one. The roles of a few factors that could potentially cause segmentation of the US market are estimated. Research limitations/implications – The estimated degree of US market integration is crude because of the relatively small spatial sample. Further research has to substantially widen the spatial sample and estimate integration of the US market across a number of points in time. Originality/value – The paper suggests a realistic benchmark standard for judging the extent of market integration in various (geographically large) economies.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Emerald Group Publishing in its journal Journal of Economic Studies.
Volume (Year): 37 (2010)
Issue (Month): 4 (September)
Contact details of provider:
Web page: http://www.emeraldinsight.com
Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Other versions of this item:
- Gluschenko, Konstantin & Kulighina, Darya, 2006. "Assessing a feasible degree of product market integration. (A pilot analysis)," BOFIT Discussion Papers 3/2006, Bank of Finland, Institute for Economies in Transition.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F15 - International Economics - - Trade - - - Economic Integration
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Charles Engel & John H. Rogers, 1995.
"How wide is the border?,"
Research Working Paper
95-09, Federal Reserve Bank of Kansas City.
- Charles Engel & John H. Rogers, 1994. "How Wide is the Border?," NBER Working Papers 4829, National Bureau of Economic Research, Inc.
- Charles Engel & John H. Rogers, 1995. "How wide is the border?," International Finance Discussion Papers 498, Board of Governors of the Federal Reserve System (U.S.).
- Engel, C. & Rogers, J.H., 1995. "How Wide is the Border?," Papers 4-95-16, Pennsylvania State - Department of Economics.
- Berkowitz, Daniel & DeJong, David N., 2003. "Regional integration: an empirical assessment of Russia," Journal of Urban Economics, Elsevier, vol. 53(3), pages 541-559, May.
- Konstantin Gluschenko, 2004.
"Analysing changes in market integration through a cross-sectional test for the law of one price,"
International Journal of Finance & Economics,
John Wiley & Sons, Ltd., vol. 9(2), pages 135-149.
- David C. Parsley & Shang-Jin Wei, 1996.
"Convergence to the Law of One Price Without Trade Barriers or Currency Fluctuations,"
NBER Working Papers
5654, National Bureau of Economic Research, Inc.
- Parsley, David C & Wei, Shang-Jin, 1996. "Convergence to the Law of One Price without Trade Barriers or Currency Fluctuations," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 1211-36, November.
- Stephen G. Cecchetti & Nelson C. Mark & Robert J. Sonora, 2002. "Price Index Convergence Among United States Cities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1081-1099, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.