IDEAS home Printed from https://ideas.repec.org/a/eme/caerpp/v4y2012i3p318-341.html
   My bibliography  Save this article

Reforms, WTO, arbitrage efficiency and integration between the China-US soybean markets

Author

Listed:
  • Shengfei Han
  • Pei He

Abstract

Purpose - The purpose of this paper is to develop a new approach to market analysis, and test how the China-US soybean market integration and arbitrage efficiency have changed across 1995/1-/2004/1 – a period covering strengthened government efforts to join WTO, and the institutional changes following WTO accession. Design/methodology/approach - The authors employ a regime-switching model with parametric, semi-parametric, and nonparametric measures to discern different market conditions in the sample period, as well as detect the structural shifts over time. Three types of data – expected prices, transaction costs, and trade flow – are used for the analysis. Findings - Results of the analysis indicate better integration over time, but deteriorating efficiency. The markets often departed from efficient arbitrage throughout the study periods, and counter-intuitively worsened after China's elimination of quota in 1999, and accession to WTO in 2001. One other interesting finding is that the state monopoly practice in soybean trading during the early periods produced seemingly competitive equilibrium price relationships. Originality/value - The paper is an original work that provides policy implications regarding the impacts and effectiveness of government policies on China's international soybean markets, the remaining bottlenecks, and the challenge to both Chinese soybean farmers and the US exporters. The method of identifying trade variation in a price model and the combination of parametric and semi-parametric analyses with comprehensive data further permits more accurate and intuitive interpretations previously unavailable.

Suggested Citation

  • Shengfei Han & Pei He, 2012. "Reforms, WTO, arbitrage efficiency and integration between the China-US soybean markets," China Agricultural Economic Review, Emerald Group Publishing, vol. 4(3), pages 318-341, August.
  • Handle: RePEc:eme:caerpp:v:4:y:2012:i:3:p:318-341
    as

    Download full text from publisher

    File URL: http://www.emeraldinsight.com/10.1108/17561371211263356?utm_campaign=RePEc&WT.mc_id=RePEc
    Download Restriction: Access to full text is restricted to subscribers

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Spiller, Pablo T & Huang, Cliff J, 1986. "On the Extent of the Market: Wholesale Gasoline in the Northeastern United States," Journal of Industrial Economics, Wiley Blackwell, vol. 35(2), pages 131-145, December.
    2. Colin A. Carter & Neil A. Hamilton, 1989. "Wheat inputs and the law of one price," Agribusiness, John Wiley & Sons, Ltd., vol. 5(5), pages 489-496.
    3. Sandra Poncet, 2005. "A Fragmented China: Measure and Determinants of Chinese Domestic Market Disintegration," Review of International Economics, Wiley Blackwell, pages 409-430.
    4. Merle D. Faminow & Bruce L. Benson, 1990. "Integration of Spatial Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(1), pages 49-62.
    5. Christopher B. Barrett & Jau Rong Li, 2002. "Distinguishing between Equilibrium and Integration in Spatial Price Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 292-307.
    6. ZY. Zhou & GH. Wan & LB. Chen, 2000. "Integration of rice markets: the case of southern China," Contemporary Economic Policy, Western Economic Association International, vol. 18(1), pages 95-106, January.
    7. G. P. Zanias, 1993. "Testing For Integration In European Community Agricultural Product Markets," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(3), pages 418-427.
    8. Michael, Panos & Nobay, A Robert & Peel, David, 1994. "Purchasing power parity yet again: evidence from spatially separated commodity markets," Journal of International Money and Finance, Elsevier, vol. 13(6), pages 637-657, December.
    9. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, pages 21-37.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:caerpp:v:4:y:2012:i:3:p:318-341. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman). General contact details of provider: http://www.emeraldinsight.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.