Grain marketing policy changes and spatial efficiency of maize and wheat markets in Ethiopia
"In the context of on-going market reform in developing countries, there is a need for an improvement in the existing methods of spatial market efficiency analysis in order to better inform the debate toward designing and implementing new grain marketing policies, institutions, and infrastructure that facilitate the emergence of a well developed and competitive grain marketing system. The standard parity bounds model (PBM), while it overcomes many weaknesses of the conventional methods of spatial market efficiency analysis, it does not allow for the test of structural changes in spatial market efficiency as a result of policy changes. In this paper, building on the standard PBM, we develop an extended parity bounds model (EPBM). The EPBM is a stochastic gradual switching model with three trade regimes. The EPBM is estimated by maximum likelihood procedure and allows for tracing the time path and structural change in spatial market efficiency conditions due to the policy changes. We applied the EPBM to analyze the effect of grain marketing policy changes on spatial efficiency of maize and wheat markets in Ethiopia. The results show that the effect of policy changes on spatial market efficiency is not significant statistically in many cases; there is high probability of spatial inefficiency in maize and wheat markets before and after the policy changes. The implication of these results is that maize and wheat markets are characterized by periodic gluts and shortages, which can undermine the welfare of producers, grain traders and consumers. It is also observed that the nature of spatial inefficiency for maize and wheat markets is different implying that the two commodities might require different policy responses in order to improve spatial market efficiency. Maize traders made losses most of the time while wheat traders made excess profits most of the time covered by the study." Authors' Abstract
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Postal: 2033 K Street, NW, Washington, DC 20006|
Web page: http://www.ifpri.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Richard J. Sexton & Catherine L. Kling & Hoy F. Carman, 1991.
"Market Integration, Efficiency of Arbitrage, and Imperfect Competition: Methodology and Application to U.S. Celery,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 73(3), pages 568-580.
- Kling, Catherine L. & Sexton, Richard & Carman, Hoy, 1991. "Market Integration, Efficiency of Arbitrage, and Imperfect Competition: Methodology and Application to U.S. Celery," Staff General Research Papers 1609, Iowa State University, Department of Economics.
- Moschini, GianCarlo & Meilke, Karl D., 1989.
"Modeling the Pattern of Structural Change in U.S. Meat Demand,"
Staff General Research Papers
11266, Iowa State University, Department of Economics.
- Giancarlo Moschini & Karl D. Meilke, 1989. "Modeling the Pattern of Structural Change in U.S. Meat Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 253-261.
- Spiller, Pablo T. & Wood, Robert O., 1988. "The estimation of transaction costs in arbitrage models," Journal of Econometrics, Elsevier, vol. 39(3), pages 309-326, November.
- McNew, Kevin, 1996. "Spatial Market Integration: Definition, Theory, And Evidence," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 25(1), April.
- Barrett, Christopher B. & Li, Jau-Rong & Bailey, DeeVon, 2000.
"Factor And Product Market Tradability And Equilibrium In Pacific Rim Pork Industries,"
Journal of Agricultural and Resource Economics,
Western Agricultural Economics Association, vol. 25(01), July.
- Barrett, Christopher B. & Li, Jau-Rong & Bailey, DeeVon, 1999. "Factor and Product Market Tradability and Equilibrium in Pacific Rim Pork Industries," Working Papers 127696, Cornell University, Department of Applied Economics and Management.
- Albert Park & Hehui Jin & Scott Rozelle & Jikun Huang, 2002. "Market Emergence and Transition: Arbitrage, Transaction Costs, and Autarky in China's Grain Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(1), pages 67-82.
- 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.
- Kherallah, Mylène & Delgado, Christopher L. & Gabre-Madhin, Eleni Z. & Minot, Nicholas & Johnson, Michael, 2002. "Reforming agricultural markets in Africa," Food policy statements 38, International Food Policy Research Institute (IFPRI).
- 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.
- Ohtani, Kazuhiro & Katayama, Sei-ichi, 1986. "A gradual switching regression model with autocorrelated errors," Economics Letters, Elsevier, vol. 21(2), pages 169-172.
- Fafchamps, Marcel & Gavian, Sarah, 1996. "The Spatial Integration of Livestock Markets in Niger," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 5(3), pages 366-405, October.
- McNew, Kevin & Fackler, Paul L., 1997. "Testing Market Equilibrium: Is Cointegration Informative?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(02), December.
- Dessalegn, Gebremeskel & Jayne, Thomas S. & Shaffer, James D., 1998. "Market Structure, Conduct, and Performance: Constraints of Performance of Ethiopian Grain Markets," Food Security Collaborative Working Papers 55597, Michigan State University, Department of Agricultural, Food, and Resource Economics.
- Franzel, Steven & Colburn, Forrest & Degu, Getahun, 1989. "Grain marketing regulations : Impact on peasant production in Ethiopia," Food Policy, Elsevier, vol. 14(4), pages 347-358, November.
- Bob Baulch, 1997. "Transfer Costs, Spatial Arbitrage, and Testing for Food Market Integration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 477-487.
When requesting a correction, please mention this item's handle: RePEc:fpr:mtiddp:66. 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: ()
If references are entirely missing, you can add them using this form.