MAIZE MARKETS IN MOZAMBIQUE: TESTING FOR MARKET INTEGRATION
Niels Penzhorn and
Channing Arndt ()
Agrekon, 2002, vol. 41, issue 2
The issue of market integration lies at the heart of many contemporary debates concerning market liberalization, price policy, and government agency reforms in developing country food markets, Mozambique being one of the poorest. Without spatial integration of markets, price signals will not be transmitted from deficit to surplus areas, prices will be more volatile, agricultural producers will fail to specialize according to long-term comparative advantage, and the gains from trade will not be realized. The objective of this article is to indicate the extent of market integration between major Mozambican maize markets. Recognizing the statistical dangers and inaccuracies of using measures of price correlation to test for market integration, a new methodology for testing the state of food market integration is employed in this study, namely the parity bounds model, (PBM) as developed by Baulch (1997). This method provides a more reliable procedure for testing violations of spatial arbitrage conditions than conventional methods, because it compares time series of observed price differentials with transfer costs and explicitly recognizes that spatial arbitrage conditions are represented by inequality constraints. The results point to a failure of spatial arbitrage conditions between the Maputo and Chimoio markets about 23% of the time over the period
Keywords: Crop Production/Industries; Marketing (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ags:agreko:245992
Access Statistics for this article
More articles in Agrekon from Agricultural Economics Association of South Africa (AEASA) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().