Structural Model of Agricultural Markets in Developing Countries

J. Butler and Christine Moser

American Journal of Agricultural Economics, 2010, vol. 92, issue 5, 1364-1378

Abstract: Switching regime models, including the Parity Bounds Model, are commonly used for assessing market integration, although they are not well suited to multiple market contexts. We develop an alternative structural model of markets that incorporates explanatory variables and generates the probability that a single market is integrated, therefore making it possible to identify specific factors or regions of a country associated with low integration. Our application to intraprovincial rice markets in Madagascar predicts that 56% of markets are integrated. High crime areas are less likely to be integrated, while the center of the country has a higher level of integration. Copyright 2010, Oxford University Press.

Date: 2010
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