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Spatial Price Adjustment with and without Trade

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Author Info
Stephens, Emma C.
Mabaya, Edward
Abstract

In this paper we introduce a switching error correction model (SECM) estimator that allows for the possibility that price transmission between markets might vary during periods with and without physical trade flows. Applying this new approach to semi-weekly data on tomato markets in Zimbabwe, we find that intermarket price adjustment occurs quickly and as much when there is no trade as when product flows from one market to another. This finding underscores the importance of information flow for market performance.

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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida with number 6538.

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Date of creation: 2008
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Handle: RePEc:ags:aaea08:6538

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Related research
Keywords: Marketing; Research Methods/ Statistical Methods; Q13; R12; C32; P42;

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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. Hansen, Bruce E. & Seo, Byeongseon, 2002. "Testing for two-regime threshold cointegration in vector error-correction models," Journal of Econometrics, Elsevier, vol. 110(2), pages 293-318, October. [Downloadable!] (restricted)
  2. 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)
  3. Balke, Nathan S & Fomby, Thomas B, 1997. "Threshold Cointegration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 627-45, August.
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  4. 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)
  5. Robert Jensen, 2007. "The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 879-924, 08. [Downloadable!] (restricted)
  6. Jesús Gonzalo & Jean-Yves Pitarakis, 2006. "Threshold Effects in Cointegrating Relationships," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(s1), pages 813-833, December. [Downloadable!] (restricted)
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  7. Stefan Dercon & Bjorn Van Campenhout, 1999. "Dynamic Price Adjustment in Spatially Separated Food Markets with Transaction Costs," Center for Economic Studies - Discussion papers ces9909, Katholieke Universiteit Leuven, Centrum voor Economische Studiën. [Downloadable!]
  8. P aul L. F ackler & H üseyin T astan, 2008. "Estimating the Degree of Market Integration," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 90(1), pages 69-85, 02. [Downloadable!] (restricted)
  9. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-56, July. [Downloadable!] (restricted)
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  10. Goodwin, Barry K & Piggott, Nicholas E, 2001. " Spatial Market Integration in the Presence of Threshold Effects," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 83(2), pages 302-17, May. [Downloadable!] (restricted)
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  1. Loening, Josef L. & Durevall, Dick & Birru, Yohannes A., 2009. "Inflation dynamics and food prices in an agricultural economy : the case of Ethiopia," Policy Research Working Paper Series 4969, The World Bank. [Downloadable!]
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