Market integration and convergence to the law of one price in the North American onion markets
The North American agricultural markets have become much more integrated; but the level of integration varies across sectors and over time. Differential tariff phasing-out periods and remaining trade disputes are two of many factors contributing to this. This article applies panel data unit root tests to study price convergence and market integration in the North American onion markets. Commodity and variety monthly base price data for the period of 1998 to 2006 are used. Empirical results decisively suggest the existence of price convergence across markets as well as onion varieties. A two-sample period analysis shows an increase in the speed of price convergence over time, suggesting deeper market integration as NAFTA was fully implemented. Further analysis based on a two-country-market basis found that U.S.-Canadian markets have experienced deeper market integration compared with U.S.-Mexican markets as well as Canadian-Mexican markets. [EconLit citations: F150, Q170]. © 2008 Wiley Periodicals, Inc.
Volume (Year): 24 (2008)
Issue (Month): 2 ()
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