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A TEST FOR PRICE INTEGRATION IN THE EC LAMB MARKET
Author(s) -
Gordon D. V.,
Hobbs J. E.,
Kerr W. A.
Publication year - 1993
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.1993.tb00255.x
Subject(s) - economics , market integration , order (exchange) , market price , mid price , product (mathematics) , price level , law of one price , list price , limit price , monetary economics , financial economics , macroeconomics , microeconomics , geometry , mathematics , finance , real estate
The purpose of this paper is to test for price integration in the British‐French markets for lamb in the period after the introduction of the EC sheepmeat regime in 1980. A Holmes‐Hutton rank order procedure is used to determine if price changes in one market cause price changes in the other market and thus define an integrated market. Using weekly price data for the period 1983‐86, the results indicate that the British‐French lamb markets are integrated in that a price change in one market is fully reflected in price changes in the other. However, there is considerable lag time in response to price changes. This may be attributed to less than perfect substitution between the British and French product, to the ex post nature of the clawback provision that existed in the British price support system during the period of analysis, and to informal trade barriers.