Spatial Price Adjustment with and without Trade
Emma C. Stephens and
Edward T. Mabaya
No 6538, 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)
In this paper we introduce a switching error correction model (SECM) estimator that allows for the possibility that price transmission between markets might vary during periods with and without physical trade flows. Applying this new approach to semi-weekly data on tomato markets in Zimbabwe, we find that intermarket price adjustment occurs quickly and as much when there is no trade as when product flows from one market to another. This finding underscores the importance of information flow for market performance.
Keywords: Marketing; Research Methods/ Statistical Methods; Q13; R12; C32; P42 (search for similar items in EconPapers)
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Persistent link: http://EconPapers.repec.org/RePEc:ags:aaea08:6538
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