Market Integration and Transport Costs in France 1825-1903: A Threshold Error Correction Approach to the Law of One Price
Mette Ejrnæs and
Karl Gunnar Persson
Additional contact information
Karl Gunnar Persson: Institute of Economics, University of Copenhagen
No 98-19, Discussion Papers from University of Copenhagen. Department of Economics
This paper argues that the appropriate standard for the analysis of commodity market integration is the transport cost adjusted law of one price. A threshold error correction model that incorporates that property is developed and applied to French wheat prices in the 19th century. This type of modelling acknowledges the fact that error corrections only take place when price differentials between markets exceed transport costs. The method used generates more accurate estimates of the adjustment speed to eqilibrium price differentials between markets and transport costs, which turn out to have a good fit with observed costs. Unlike previous studies this paper shows that French wheat markets were well integrated by the middle of the 19th century.
Keywords: market integration; Law of One Price; error correction; France (search for similar items in EconPapers)
JEL-codes: N73 C32 (search for similar items in EconPapers)
Pages: 33 pages
References: Add references at CitEc
Citations: Track citations by RSS feed
Published in: Explorations in Econ History 37(2) 2000, 149-173
Downloads: (external link)
Journal Article: Market Integration and Transport Costs in France 1825-1903: A Threshold Error Correction Approach to the Law of One Price (2000)
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:kud:kuiedp:9819
Access Statistics for this paper
More papers in Discussion Papers from University of Copenhagen. Department of Economics ï¿½ster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().