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Proximity and price co-movement in West African rice markets

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  • Mengel, Carolin
  • von Cramon-Taubadel, Stephan

Abstract

This study explores the link between proximity and price cointegration between two markets, where proximity is captured with variables for geographical, political and cultural distance. Linear and threshold cointegration is tested for a set of 756 rice market pairs in 6 West African countries, with threshold specifications accounting for transaction costs. Whether proximity influences price transmission is determined in a second step with a multinomial logistic regression. The estimation produces robust and statistically significant evidence of a link with air-line and road distance, international borders, contiguity and a common language. We conclude that proximity matters for market integration processes in West African rice markets.

Suggested Citation

  • Mengel, Carolin & von Cramon-Taubadel, Stephan, 2014. "Proximity and price co-movement in West African rice markets," GlobalFood Discussion Papers 170989, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
  • Handle: RePEc:ags:gagfdp:170989
    DOI: 10.22004/ag.econ.170989
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    File URL: http://ageconsearch.umn.edu/record/170989/files/GlobalFood_DP38.pdf
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    References listed on IDEAS

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    1. Carolin Kouyaté & Stephan Cramon-Taubadel, 2016. "Distance and Border Effects on Price Transmission: A Meta-analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(2), pages 255-271, June.
    2. Engel, Charles & Rogers, John H, 1996. "How Wide Is the Border?," American Economic Review, American Economic Association, vol. 86(5), pages 1112-1125, December.
    3. Fackler, Paul L. & Goodwin, Barry K., 2001. "Spatial price analysis," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.),Handbook of Agricultural Economics, edition 1, volume 1, chapter 17, pages 971-1024, Elsevier.
    4. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
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    6. Hansen, Bruce E. & Seo, Byeongseon, 2002. "Testing for two-regime threshold cointegration in vector error-correction models," Journal of Econometrics, Elsevier, vol. 110(2), pages 293-318, October.
    7. Friederike Greb & Stephan von Cramon-Taubadel & Tatyana Krivobokova & Axel Munk, 2013. "The Estimation of Threshold Models in Price Transmission Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(4), pages 900-916.
    8. Emma C. Stephens & Edward Mabaya & Stephan von Cramon-Taubadel & Christopher B. Barrett, 2012. "Spatial Price Adjustment with and without Trade," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(3), pages 453-469, June.
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    11. Demont, Matty & Rutsaert, Pieter & Ndour, Maimouna & Verbeke, Wim, 2013. "Reversing Urban Bias in African Rice Markets: Evidence from Senegal," World Development, Elsevier, vol. 45(C), pages 63-74.
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    Cited by:

    1. Mu, Y., 2018. "Pork price transmission and efficiency in China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277387, International Association of Agricultural Economists.
    2. Matthias Kalkuhl & Lukas Kornher & Matthias Kalkuhl & Irfan Mujahid, 2015. "Food price volatility in developing countries – the role of trade and storage," EcoMod2015 8415, EcoMod.
    3. Carolin Kouyaté & Stephan Cramon-Taubadel, 2016. "Distance and Border Effects on Price Transmission: A Meta-analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(2), pages 255-271, June.
    4. Stephan von Cramon-Taubadel, 2017. "The analysis of market integration and price transmission – results and implications in an African context," Agrekon, Taylor & Francis Journals, vol. 56(2), pages 83-96, April.

    More about this item

    Keywords

    Demand and Price Analysis; International Relations/Trade;

    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
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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