Integration of EGG markets in India: A cointegration analysis

Vijay Intodia

Indian Journal of Agricultural Marketing, 2020, vol. 34, issue 3

Abstract: Cointegration methodology and Granger causality test are applied to test the integration of egg markets in India. Market integration means that the commodity price information is efficiently transmitted across the geographically separated markets. The integrated markets ensure remunerative prices to producers and affordable prices to the consumers. The present study tested the integration of egg markets in India using the price series data of six markets including Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, and Mumbai for the period from 2010 to 2019. The Johansen cointegration methodology was used to test market integration. Results of the Johansen cointegration test showed a high degree of cointegration between various egg markets in the country indicating the presence of long-run price equilibrium between the markets. In fact, out of fifteen market pairs tested for bivariate cointegration, ten market pairs were found to be cointegrated. However, the Kolkata market in the eastern India was found to be cointegrated with the Delhi market only. All the ten market pairs which were found to be cointegrated indicated the presence of bidirectional or unidirectional causality in the Granger causality test. It is imperative that the efficiency of markets particularly in eastern India is enhanced by strengthening the information flow and transportation facilities. The efficient flow of information regarding demand, supply, and prices to and from various markets will help mitigate price volatility and enhance market integration. The integrated markets will result in a better allocation of resources and increase the overall welfare of producers and consumers.

Keywords: Marketing (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ags:injagm:399698

DOI: 10.22004/ag.econ.399698

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