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Price convergence and market integration in Russia

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Listed author(s):
  • Gluschenko, Konstantin

Abstract

Following the price-liberalization reforms implemented by Russia in 1992, an initial period of disconnect between regional markets began to transform around 1994. This paper analyzes the spatial pattern of goods market integration that evolved within Russia in 1994-2000, classifying country's regions into three categories: integrated with a benchmark region, not integrated but tending towards integration, and not integrated and not tending towards integration. To quantify tendencies towards integration, an AR(1) model of regional price differentials is augmented with a trend term that is capable of displaying asymptotic decay (indicating price convergence). The results obtained suggest that only about one-fifth of Russia's regions appear as not integrated and showing no tendency towards integration over the sample period.

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 41 (2011)
Issue (Month): 2 (March)
Pages: 160-172

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Handle: RePEc:eee:regeco:v:41:y:2011:i:2:p:160-172
Contact details of provider: Web page: http://www.elsevier.com/locate/regec

Keywords: Law of one price Price dispersion Nonlinear trend Russian regions;

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Find related papers by JEL classification:
  • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
  • P22 - Economic Systems - - Socialist Systems and Transition Economies - - - Prices
  • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
  • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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  1. Bentzen, Jan, 2003. "An empirical analysis of gasoline price convergence for 20 OECD countries," Working Papers 03-19, University of Aarhus, Aarhus School of Business, Department of Economics.
  2. Berkowitz, Daniel & DeJong, David N., 1999. "Russia's internal border," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 633-649, September.
  3. Whitney K. Newey & Kenneth D. West, 1994. "Automatic Lag Selection in Covariance Matrix Estimation," Review of Economic Studies, Oxford University Press, vol. 61(4), pages 631-653.
  4. Konstantin Gluschenko, 2010. "Anatomy of Russia's market segmentation," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(1), pages 27-58, 01.
  5. Janet Ceglowski, 2003. "The law of one price: intranational evidence for Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 36(2), pages 373-400, May.
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  7. Berkowitz, Daniel & DeJong, David N., 2003. "Regional integration: an empirical assessment of Russia," Journal of Urban Economics, Elsevier, vol. 53(3), pages 541-559, May.
  8. Gluschenko, Konstantin, 2011. "Price convergence and market integration in Russia," Regional Science and Urban Economics, Elsevier, vol. 41(2), pages 160-172, March.
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  13. Konstantin Gluschenko, 2003. "Market integration in Russia during the transformation years," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 411-434, 09.
  14. Cushman, David O. & MacDonald, Ronald & Samborsky, Mark, 2001. "The law of one price for transitional Ukraine," Economics Letters, Elsevier, vol. 73(2), pages 251-256, November.
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  19. Gluschenko, Konstantin, 2004. "Nonlinearly testing for a unit root in the presence of a break in the mean," MPRA Paper 678, University Library of Munich, Germany, revised Sep 2005.
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Cited by:

  1. Gluschenko, Konstantin, 2017. "Spatial pattern of Russia’s market integration," MPRA Paper 76995, University Library of Munich, Germany.
  2. Guna Salputra & Myrna van Leeuwen & Petra Salamon & Thomas Fellmann & Martin Banse & Oliver Ledebur, 2013. "The agri-food sector in Russia: Current situation and market outlook until 2025," JRC Working Papers JRC76915, Joint Research Centre (Seville site).
  3. Gluschenko, Konstantin, 2011. "Price convergence and market integration in Russia," Regional Science and Urban Economics, Elsevier, vol. 41(2), pages 160-172, March.
  4. Ritola, Maria, 2008. "Price convergence and geographic dimension of market integration : Evidence from China," BOFIT Discussion Papers 13/2008, Bank of Finland, Institute for Economies in Transition.
  5. Riccardo Crescenzi & Alexander Jaax, 2015. "Innovation in Russia: the territorial dimension," Papers in Evolutionary Economic Geography (PEEG) 1509, Utrecht University, Section of Economic Geography, revised Apr 2015.
  6. M. Ege Yazgan & Hakan Yilmazkuday, 2016. "High versus low inflation: implications for price-level convergence," Empirical Economics, Springer, vol. 50(4), pages 1527-1563, June.
  7. Konstantin Gluschenko, 2015. "Impact of the global crisis on spatial disparities in Russia," Papers in Regional Science, Wiley Blackwell, vol. 94(1), pages 3-23, 03.
  8. Konstantin Gluschenko, 2006. "Price Linkages of Russian Regional Markets," William Davidson Institute Working Papers Series wp839, William Davidson Institute at the University of Michigan.
  9. Zarembova, Andrea & Lyocsa, Stefan & Baumöhl, Eduard, 2012. "The Real Convergence of CEE Countries: A Study of Real GDP per capita," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 642-656..
  10. Götz, Linde & Glauben, Thomas & Brümmer, Bernhard, 2013. "Wheat export restrictions and domestic market effects in Russia and Ukraine during the food crisis," Food Policy, Elsevier, vol. 38(C), pages 214-226.

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