A Potato Market Integration Analysis for India

Olli Salmensuu

Review of Market Integration, 2017, vol. 9, issue 3, 111-138

Abstract: We constructed co-integration relation and Engle–Granger type error-correction models for the wholesale potato markets of three Indian regions. In addition to the standard result of the existence of error-correction mechanisms in Indian potato markets, the chosen setting allows for inspection of how these market areas differ in their return to the co-integrating relation. The northern area differed from the other market relations studied with its slower return to equilibrium, 8.0–8.6 weeks compared to 5.0–6.3 weeks. The result may indicate that the Delhi and Agra markets are central playing grounds for speculators, speculators manipulating potato prices farther and longer time away from the natural price relation. Short-run or same-week elasticities between the markets studied ranged from 0.12 to 0.34. Long-run elasticities ranged from 0.55 to 1.11. Short-run effect has to be multiplied by approximately four to obtain the long-run effect. JEL: Q13, Q18, R12, R32

Keywords: Market integration; co-integration; error-correction; speculation; developing countries (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:revmar:v:9:y:2017:i:3:p:111-138

DOI: 10.1177/0974929217744657

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