How is the liberalization of food markets progressing ? market integration and transaction costs in subsistence economies
AbstractThe paper proposes a modification of Baulch's parity bounds model to measure the market integration of food markets in developing countries. Instead of extrapolating a single observation of transaction costs, it estimates transaction costs. Predicted transaction costs compare well with survey data of traders. Probabilities of market regimes, computed on the basis of predicted transaction costs, fluctuate significantly and do not support fixed regime probabilities over time. The probability of market integration with trade decreases consistently during food shortages, increasing either the probability of no trade or loss-making trade or the probability of profitable but unexploited trade opportunities. The data support a negative trend in market integration with trade.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 6331.
Date of creation: 01 Jan 2013
Date of revision:
Markets and Market Access; Transport Economics Policy&Planning; Debt Markets; Economic Theory&Research; Food&Beverage Industry;
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-02-03 (Agricultural Economics)
- NEP-ALL-2013-02-03 (All new papers)
- NEP-INT-2013-02-03 (International Trade)
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