The integration of Nigeria's rural and urban foodstuffs markets
AbstractThe study intended to determine the presence and level of integration of the rural and urban foodstuffs markets of Nigeria. A central prediction of the law of one price is that prices of all transactions will tend to uniformity, allowing for the transportation cost between different spatial markets. Using the Johansen bivariate test of cointegration, it was established that the rural and urban foodstuffs markets are pair-wise cointegrated. The test for convergence to the law of one price as well as the test for weak exogeneity for urban foodstuffs prices (Y1) could not be rejected at the 1% level of significance. Hence, we conclude that the rural and urban foodstuffs markets are well integrated and are in the same market for arbitrage. The results further suggest that the urban market price drives the rural market price. The size of the adjustment coefficient for the rural foodstuffs price (Y2) shows that the speed of adjustment to disequilibrium is moderate. The persistence profile further shows that it would take about five months for the effects of a shock on the market system to die out. The findings of this research have significant policy implications for Nigeria’s domestic foodstuffs market system as well as its international trade policies.
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.
Bibliographic InfoPaper provided by African Economic Research Consortium in its series Research Papers with number RP_151.
Length: 52 pages
Date of creation: Nov 2005
Date of revision:
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (winston wachanga).
If references are entirely missing, you can add them using this form.