The Evolution of the Pricing Mechanism in the Polish Vegetable Markets: An Empirical Test

Changes in price interaction between farmers' markets and retail stores were traced for Poland's vegetable markets. The vegetable market has been functioning within a competitive framework since the late 1950's. Using monthly price observations for cabbage, onions, potatoes, and carrots, the Granger causality test was applied to test the lead/lag relationship between the two types of outlets. Unidirectional causality test results indicate that a gradual price interaction occurred among the vegetable prices starting in the period of 1974 to 1979 and increased noticeably during the 1980's. This slowly unfolding process was a contributing factor in the forcing of economic liberalization.