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Spatial Price Linkages in Regional Food Grain Markets in India

Author

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  • Madhusudan Ghosh

    (Madhusudan Ghosh, Professor of Economics, Department of Economics & Politics, Visva-Bharati University, Santiniketan, Birbhum, West Bengal 731235; e-mail: msghosh123@rediffmail.com)

Abstract

This paper examines spatial integration of food grain markets in India. Using the maximum likelihood method of cointegration, it investigates whether regional food grain markets within and across states are spatially linked or not. The cointegration tests provide evidence in favour of spatial integration of the regional food grain markets. Even though regional markets are geographically dispersed, prices across different market centres within and across states have exhibited long-run spatial linkages, suggesting that all the exchange locations are integrated and that prices provide relevant market signals. There are, however, regional variations in the extent of market integration, which could be due to regional disparities in infrastructure and the institutional structure of food grain markets. The results have important implications for agricultural price policy and the food market liberalisation programme.

Suggested Citation

  • Madhusudan Ghosh, 2010. "Spatial Price Linkages in Regional Food Grain Markets in India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 4(4), pages 495-516, November.
    • Handle: RePEc:sae:mareco:v:4:y:2010:i:4:p:495-516
    DOI: 10.1177/097380101000400405
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    More about this item

    Keywords

    Unit Root; Cointegration; Spatial Market Integration; Law of One Price; Indian Food Grain Markets; JEL Classification: C22; JEL Classification: C32; JEL Classification: O53; JEL Classification: Q11;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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