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SPATIAL integration of the rice market: emprirical evidence from mid-west and far-west Nepal and the Nepalese-Indian border

  • Sanogo, Issa

This paper studies the integration of rice markets in the mid-west and far-west districts of Nepal. The data were drawn mainly from the World Food Programme (WFP) database on Nepal. Results indicate that the rice markets of the hinterland are poorly integrated with the regional market of Nepalgunj. In contrast, price fluctuations are transmitted, both in the short and medium run, across the Indian-Nepali border between Nepalgunj and the Indian border districts of Rupedia and Jogbani. Large price differentials relative to transport costs indicate market inefficiencies in the mid-west and far-west districts of Nepal. Moreover, the poor road infrastructure determines the price differentials. Poor infrastructure impedes price correlation and convergence between these districts. Given its opendoor policy with India and the ongoing efforts to further align trade policies with the World Trade Organization, the findings suggest that Nepal would maintain its partnership with India and build an effective market surveillance system that covers the Indian border markets as well, to ensure food security in the short run. However, substantial investment in transport infrastructure is required to improve market integration and accessibility in the long run, especially in the hilly and mountainous areas.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14488.

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Date of creation: 2008
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Publication status: Published in Asian Journal of Agriculture and Development 1.4(2008): pp. 139-156
Handle: RePEc:pra:mprapa:14488
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  1. 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.
  2. Haldrup, Niels, . "Empirical analysis of price data in the delineation of the relevant geographical market in competition analysis," Economics Working Papers 2003-9, School of Economics and Management, University of Aarhus.
  3. Christopher B. Barrett, 1996. "Market Analysis Methods: Are Our Enriched Toolkits Well Suited to Enlivened Markets?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 825-829.
  4. Shahidur Rashid, 2004. "Spatial Integration of Maize Markets in Post-liberalised Uganda," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 13(1), pages 102-133, March.
  5. 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.
  6. 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.
  7. Chowdhury, Shyamal & Negassa, Asfaw & Torero, Maximo, 2005. "Market institutions: Enhancing the Value of Rural-Urban Links," FCND discussion papers 195, International Food Policy Research Institute (IFPRI).
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