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Market Integration, Efficiency of Arbitrage, and Imperfect Competition: Methodology and Application to U.S. Celery

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Listed:
  • Sexton, Richard J.
  • Kling, Catherine L.
  • Carman, Hoy F.

Abstract

This paper develops and applies a methodology to test for efficiency in interregional commodity arbitrage. The methodology is empirically manifest as a switching regression model with three regimes: efficient arbitrage, relative shortage, and relative glut. Results from application of the model to U.S. celery marketing indicate significant departures from efficient arbitrage for both California and Florida celery.

Suggested Citation

  • Sexton, Richard J. & Kling, Catherine L. & Carman, Hoy F., 1990. "Market Integration, Efficiency of Arbitrage, and Imperfect Competition: Methodology and Application to U.S. Celery," 1990 Annual meeting, August 5-8, Vancouver, Canada 270897, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea90:270897
    DOI: 10.22004/ag.econ.270897
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    References listed on IDEAS

    as
    1. Richardson, J. David, 1978. "Some empirical evidence on commodity arbitrage and the law of one price," Journal of International Economics, Elsevier, vol. 8(2), pages 341-351, May.
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      • Stigler, George J. & Sherwin, Robert A., 1983. "The Extent of the Market," Working Papers 31, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
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