Assessing a feasible degree of product market integration. (A pilot analysis)

Konstantin Gluschenko () and Darya Kulighina
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Darya Kulighina: Novosibirsk State University

No 3/2006, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition

Abstract: Perfect integration eludes the real world, so we suggest a realistic benchmark standard for judging the extent of market integration in various economies. We estimate the degree of integration in the US product market, widely acknowledged to be the most integrated among geographically large economies, so as to provide a reference for measuring Russian market integration. Prices for 27 grocery items across 29 cities of the United States in the first quarter of 2000 are used as empirical data. The estimated degree of integration turns out to be very close to values obtained for Russia for 2000. Apparently, market integration in Russia has in recent years moved toward conditions found in advanced market economies. The roles of other factors that could potentially cause segmentation of the US market are also analyzed.

Keywords: market integration; price dispersion; law of one price; United States; Russia (search for similar items in EconPapers)
JEL-codes: F14 F15 L81 R11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cis and nep-tra
Date: 2006-04-19
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:bofitp:2006_003

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