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STRUCTURAL DETERMINANTS OF MARKET INTEGRATION: THE CASE OF RICE MARKETS IN BANGLADESH
Author(s) -
GOLETTI Francesco,
AHMED Raisuddin,
FARID Naser
Publication year - 1995
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.1995.tb00713.x
Subject(s) - citation , library science , computer science
PATIAL market integration refers to co-movements of prices, and, more generally, to the smooth transmission of price signals and information across spatially separated markets. In this paper, the topic of spatial market integration, as opposed to inter-temporal price integration and vertical price integration, will be generically referred to as market integration. There are several reasons for studying market integration. Such study makes it possible to identify groups of integrated markets, so as to avoid duplication of intervention. If locations A, B, and C are well integrated, then the government may think of withdrawing from, or at least reduce, its effort to influence the price process in those locations. A scarcity in A will be quickly transmitted to B and C, making it redundant to duplicate the same program (for example, an open market sale operation or a procurement activity) in all three locations. Moreover, by giving a more detailed picture of the process of transmission of incentives across the marketing chain, knowledge of market integration is relevant to the success of policies such as market liberalization or price stabilization. Market integration ensures that a regional balance occurs among food-deficit and food-surplus regions, and regions producing nonfood cash crops (see Delgado [8]). If price transmission does not occur, the localized scarcities and abundances may result in excessive strain on the population (see Ravallion [21]). Finally, the identification of the structural factors responsible for the integration of markets may improve policy oriented toward market development. The study of market integration has usually tried to characterize the degree of co-movement of prices across spatially separated markets. Since prices are the most readily available and often the most reliable information on developing country marketing systems, market integration studies have almost exclusively referred to events resulting in price changes. Most specifically, market integration is restricted to the interdependence of price changes across spatially separated locations in a market (Wyeth [23]). Past research has identified various measures of market integration including The Developing Economies, XXXIII-2 (June 1995)