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The Spatial Integration of Paddy Markets in Vietnam

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  • Bob Baulch
  • Henrik Hansen
  • Le Dang Trung
  • Tran Ngo Minh Tam

Abstract

This paper examines whether there is spatial integration between and within paddy markets in the north and south of Vietnam. The empirical model developed uses estimates of transfer costs to generalise Ravallion's model of spatial market integration to allow for threshold effects. A sequential testing strategy is used to test for market segmentation, the number of thresholds, long-run integration, informational efficiency and the Law of One Price within an error-correction framework. We find neither threshold effects nor weak evidence of paddy market integration between northern and southern Vietnam. There is, however, evidence of both threshold effects and stronger market integration within the Red and Mekong River deltas. Whenever price spreads exceed their thresholds, at least 60% of price changes are transmitted between regional markets within a month. Nonetheless, the instantaneous version of the Law of One Price only holds for a few regimes and market pairs. These results suggest that national level policies cannot be relied upon to stabilise or support paddy prices in Vietnam. Instead, policies need to be designed with the specific production, consumption and marketing characteristics of northern and southern Vietnam in mind. Copyright (c) 2008 The Authors. Journal compilation (c) 2008 The Agricultural Economics Society.

Suggested Citation

  • Bob Baulch & Henrik Hansen & Le Dang Trung & Tran Ngo Minh Tam, 2008. "The Spatial Integration of Paddy Markets in Vietnam," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(2), pages 271-295, June.
  • Handle: RePEc:bla:jageco:v:59:y:2008:i:2:p:271-295
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1477-9552.2007.00148.x
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    References listed on IDEAS

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    1. Barker, R. & Ringler, C. & Tien, N. M. & Rosegrant, M., 2004. "Macro policies and investment priorities for irrigated agriculture in Vietnam," IWMI Research Reports H036329, International Water Management Institute.
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    Cited by:

    1. Loening, Josef L., 2011. "Lao People’s Democratic Republic: responding to rice price inflation," MPRA Paper 33443, University Library of Munich, Germany.
    2. Fabio Gaetano Santeramo, 2015. "Price Transmission in the European Tomatoes and Cauliflowers Sectors," Agribusiness, John Wiley & Sons, Ltd., vol. 31(3), pages 399-413, June.
    3. Nyondo, Christone R.J & Davidova, Sophia M. & Bailey, Alastair, 2013. "On Market Liberalisation and Efficiency: A Structural VECM Analysis of Dry Beans Markets in Malawi," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158696, Agricultural Economics Society.
    4. Nelissa Jamora & Stephan Cramon-Taubadel, 2016. "Transaction Cost Thresholds in International Rice Markets," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(2), pages 292-307, June.

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