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How is the liberalization of food markets progressing ? market integration and transaction costs in subsistence economies

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  • Zant, Wouter

Abstract

The paper proposes a modification of Baulch's parity bounds model to measure the market integration of food markets in developing countries. Instead of extrapolating a single observation of transaction costs, it estimates transaction costs. Predicted transaction costs compare well with survey data of traders. Probabilities of market regimes, computed on the basis of predicted transaction costs, fluctuate significantly and do not support fixed regime probabilities over time. The probability of market integration with trade decreases consistently during food shortages, increasing either the probability of no trade or loss-making trade or the probability of profitable but unexploited trade opportunities. The data support a negative trend in market integration with trade.

Suggested Citation

  • Zant, Wouter, 2013. "How is the liberalization of food markets progressing ? market integration and transaction costs in subsistence economies," Policy Research Working Paper Series 6331, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6331
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Wouter Zant, 2012. "Is EU Support to Malawi Agriculture Effective?," Tinbergen Institute Discussion Papers 12-090/V, Tinbergen Institute.
    2. Brenton, Paul & Portugal-Perez, Alberto & Regolo, Julie, 2014. "Food prices, road infrastructure, and market integration in Central and Eastern Africa," Policy Research Working Paper Series 7003, The World Bank.
    3. Wouter Zant, 2015. "Trains, Trade and Transaction Costs: How does Domestic Trade by Rail affect Market Prices of Malawi Agricultural Commodities?," Tinbergen Institute Discussion Papers 15-055/V, Tinbergen Institute, revised 22 Jul 2016.
    4. Wouter (W.) Zant, 2017. "Bridges," Tinbergen Institute Discussion Papers 17-117/V, Tinbergen Institute.

    More about this item

    Keywords

    Markets and Market Access; Transport Economics Policy&Planning; Debt Markets; Economic Theory&Research; Food&Beverage Industry;

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