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Missed opportunities and missing markets: Spatio-temporal arbitrage of rice in Madagascar

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Author Info
Moser, Christine
Barrett, Christopher
Minten, Bart

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Abstract

This paper uses an exceptionally rich data set to test the extent to which markets in Madagascar are integrated across space, time, and form (in converting from paddy to rice) and to explain some of the factors that limit arbitrage and price equalization within a single country. In particular, we use rice price data across four quarters of 2000-2001 along with data on transportation costs and infrastructure availability for nearly 1400 communes in Madagascar to examine the extent of market integration at three different spatial scales—sub-regional, regional, and national—and determine whether non-integration is due to high transfer costs or lack of competition. The results indicate that markets are fairly well integrated at the sub-regional level and that factors such as high crime, remoteness, and lack of information are among the factors limiting competition. A lack of competition persists at the regional level and high transfer costs impede spatial market integration at the national level. Only six percent of rural communes appear to be intertemporally integrated and there appear to be significant untapped opportunities for interseasonal arbitrage. Income is directly and strongly related to the probability of a commune being in interseasonal competitive equilibrium.

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Publisher Info
Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19338.

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Date of creation: 2005
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Handle: RePEc:ags:aaea05:19338

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Related research
Keywords: Marketing;

References listed on IDEAS
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.:

  1. Angus Deaton & Guy Laroque, 1990. "On The Behavior of Commodity Prices," NBER Working Papers 3439, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Marcel Fafchamps & Christine Moser, 2003. "Crime, Isolation and Law Enforcement," Journal of African Economies, Oxford University Press, vol. 12(4), pages 625-671, December.
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  3. Barrett, Christopher B & Li, Jau Rong, 2002. " Distinguishing between Equilibrium and Integration in Spatial Price Analysis," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 84(2), pages 292-307, May. [Downloadable!] (restricted)
  4. Fafchamps, Marcel & Gabre-Madhin, Eleni Z. & Minten, Bart, 2003. "Increasing returns and market efficiency in agricultural trade," MTID discussion papers 60, International Food Policy Research Institute (IFPRI). [Downloadable!]
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  5. Deaton, Angus & Laroque, Guy, 1996. "Competitive Storage and Commodity Price Dynamics," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 896-923, October. [Downloadable!] (restricted)
  6. Barrett, Christopher B., 1997. "Food marketing liberalization and trader entry: Evidence from Madagascar," World Development, Elsevier, vol. 25(5), pages 763-777, May. [Downloadable!] (restricted)
  7. Marcel Fafchamps, 2002. "Returns to social network capital among traders," Oxford Economic Papers, Oxford University Press, vol. 54(2), pages 173-206, April.
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  8. Fafchamps, Marcel & Minten, Bart, 2001. "Property Rights in a Flea Market Economy," Economic Development and Cultural Change, University of Chicago Press, vol. 49(2), pages 229-67, January.
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Cited by:
(explanations, 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.)

  1. Arndt, Channing, 2005. "The Doha Trade Round and Mozambique," Policy Research Working Paper Series 3717, The World Bank. [Downloadable!]
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