Price Series Correlation and Market Integration: Some Evidence from Haiti

A commonly employed method for measuring the integration between agricultural markets in developing countries is that of correlating time series of price data for different market-places and products. This procedure builds on the rationale that if two markets are perfectly competitive and spatially well integrated, differences in prices between these markets will reflect transport and processing costs only and the bivariate correlation coefficient between a pair of such time series of prices will be equal to one. A lower correlation, according to this reasoning, will reflect bot tlenecks arising e.g. from lack of market information, lack of product homogeneity, or monopoly power. The studies that have been undertaken with this method have yielded very dif ferent results. Such studies have been made mainly in two areas: India and West Africa. 1 The «best» results have been obtained for India, with coefficients fre quently exceeding 0.80 2, while the West African studies generally give much lower figures. 3