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Rank tests for price convergence in Australian beverage markets

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  • Paul Shum
  • Kai-yin Woo
  • Shu-kam Lee

Abstract

This article examines the price convergence of beverage products within Australia in order to assess the efficacy of intranational cross-border movements of products under the Australia’s Mutual Recognition Agreement. Since the cointegrating relationship between product prices may not be exact or linear, we adopt the rank tests for analysis which do not require prior knowledge and specification of the linear or nonlinear functional form. Our results validate the price convergence of all beverage products within Australia, with the exception of a few regions in the milk market. Furthermore, a subset of the cointegration relationships exhibits nonlinear long-run price co-movements.

Suggested Citation

  • Paul Shum & Kai-yin Woo & Shu-kam Lee, 2018. "Rank tests for price convergence in Australian beverage markets," Applied Economics Letters, Taylor & Francis Journals, vol. 25(12), pages 862-866, July.
    • Handle: RePEc:taf:apeclt:v:25:y:2018:i:12:p:862-866
    DOI: 10.1080/13504851.2017.1374531
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    Cited by:

    1. Kai Yin Woo & Shu Kam Lee & Alan T. Y. Chan, 2020. "Food price convergence in Canada: A nonparametric nonlinear cointegration analysis," Economics Bulletin, AccessEcon, vol. 40(3), pages 2361-2371.

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