In a series of previous papers different aspects of the regional price behavior of wheat on the French market were investigated. The derived results, presented in Borghers [1, 2, 3, 4 and 5], are based on aggregated as well as disaggregated data and are covering the last decades of the Ancien Régime, i.e. the period 1756-1790, and the period immediately following the French revolution, i.e. the period 1806-1872. One of the main and recurrent results from these analyses is the consistent, regular but changing regional patterns in the price behavior of wheat. Furthermore these findings seem to be independent from the specific statistical techniques and measures used in the analysis. It is evident that the nature of these regularities are a great help in better understanding the internal structure of the French wheat market throughout the periods under investigation. The main purpose of this paper is to investigate whether or not these regional differences could be ‘explained’ by the geographical distance between these regions. In other words the relationship between the wheat price fluctuations in different markets will be analyzed with respect to the distance between those markets. The basic hypothesis is that the wheat price relationship, measured by the correlation coefficient, will decrease as a function of the growing distance. The dependency of the correlation on distance is known as correlation length. In this respect the correlation length can be seen as an important measure of the level of market integration. This paper is following a simple structure. In Section 2 some preliminary information will be given about the geographical locations used in the analysis. Once these locations are defined the geographical distances can be derived. An analysis of these distances will be the subject of Section 3. In Section 4 and Section 5 different aspects about the correlation length will be discussed in detail. In the final Section 6 the summarized results will be confronted with some results found in the literature.
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Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number
2006008.