Spatial Price Linkages in Regional Food Grain Markets in India

Madhusudan Ghosh
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Madhusudan Ghosh: Madhusudan Ghosh, Professor of Economics, Department of Economics & Politics, Visva-Bharati University, Santiniketan, Birbhum, West Bengal 731235; e-mail: msghosh123@rediffmail.com

Margin: The Journal of Applied Economic Research, 2010, vol. 4, issue 4, 495-516

Abstract: This paper examines spatial integration of food grain markets in India. Using the maximum likelihood method of cointegration, it investigates whether regional food grain markets within and across states are spatially linked or not. The cointegration tests provide evidence in favour of spatial integration of the regional food grain markets. Even though regional markets are geographically dispersed, prices across different market centres within and across states have exhibited long-run spatial linkages, suggesting that all the exchange locations are integrated and that prices provide relevant market signals. There are, however, regional variations in the extent of market integration, which could be due to regional disparities in infrastructure and the institutional structure of food grain markets. The results have important implications for agricultural price policy and the food market liberalisation programme.

Keywords: Unit Root; Cointegration; Spatial Market Integration; Law of One Price; Indian Food Grain Markets; JEL Classification: C22; JEL Classification: C32; JEL Classification: O53; JEL Classification: Q11 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:4:y:2010:i:4:p:495-516

DOI: 10.1177/097380101000400405

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