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 scalesÂsub-regional, regional, and nationalÂand 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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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.
Length: Date of creation: 2005 Date of revision: Handle: RePEc:ags:aaea05:19338
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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.:
Fafchamps, Marcel & Moser, Christine, 2004.
"Crime, Isolation, and Law Enforcement,"
Working Papers
UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
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