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Joint evolution of spatial integration and product segmentation on agricultural markets: the case of cereals in Mali

Magali Aubert (), Céline Bignebat () and Johny Egg

No 10103, 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece from European Association of Agricultural Economists

Abstract: Within the context of liberalisation experienced by the Malian economy since the beginning of the 1990s, spatial integration of cereal markets has been considered as a major tool as to avoid localised shortages due to production shortfalls. However, market dynamic reveals since then new patterns: the diversification of urban consumer demand towards "modern cereals", in particular rice and maize, drives the segmentation of the cereal market. As consumer s are likely to substitute traditional cereals, like millet and sorghum, for other cereal types, new market segments emerge. We account for this evolution with a theoretical model à la Hotelling : the good is considered according to two characteristics, the spatial localisation (local market) and the cereal type. We show that, as far as market integration implies the reduction of transaction, it affects the strategic decisions of sellers. In fact, incentives to invest in product differentiation (and exploit new market segments) rises relatively to the incentives to take advantage of spatial price differentials, as they decrease. Last, we test this analytical proposition on price data collected by the agricultural market information system (SIM/PAM) from 1990 to 2004 on 6 local markets in central and northern Mali. We apply a vector error - correction model, and find evidence for the intensification of spatial co- integration relations during the period. Moreover, we relate this latter dynamics to the evolution towards the segmentation of cereal markets in Mali. Last, the leader markets of this progression are identified as being the central urban markets.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 21
Date: 2006
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DOI: 10.22004/ag.econ.10103

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