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Market Integration: An Application to International Trade in Cotton

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  • Eric Monke
  • Todd Petzel

Abstract

Agricultural commodities are differentiated frequently by quality or country of origin. This paper proposes two complementary tests—bivariate price regressions and hedonic index estimation—as methods to identify whether differentiated products are amenable to treatment as a homogenous commodity. These price linkage tests represent necessary, rather than sufficient, conditions for aggregation and must be supplemented by information on market structure. Analysis of the international cotton market suggests a distinction between extra long and other staple lengths, but not by country of origin after controlling for staple length.

Suggested Citation

  • Eric Monke & Todd Petzel, 1984. "Market Integration: An Application to International Trade in Cotton," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(4), pages 481-487.
    • Handle: RePEc:oup:ajagec:v:66:y:1984:i:4:p:481-487.
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    File URL: http://hdl.handle.net/10.2307/1240927
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    Cited by:

    1. Kelbore, Zerihun Getachew, 2013. "Transmission of World Food Prices to Domestic Market: The Ethiopian Case," MPRA Paper 49712, University Library of Munich, Germany.
    2. Goundan, Anatole & Tankari, Mahamadou Roufahi, 2016. "A dynamic spatial model of agricultural price transmission: Evidence from the Niger millet market:," IFPRI discussion papers 1536, International Food Policy Research Institute (IFPRI).
    3. V. Jyothi Gali & C.G. Brown, 2002. "Price relationships in the Queensland barley market," Agribusiness, John Wiley & Sons, Ltd., vol. 18(2), pages 181-196.
    4. Taufiq Marwa & Abdul Bashir & Azwardi & Mohamad Adam & K.M.H. Thamrin, 2017. "Market Integration of Agricultural Products," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 69-82.
    5. Peng, Xuehua & Marchant, Mary A., 2003. "Spatial Price Linkages Between Chinese Regional Beef Markets," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35077, Southern Agricultural Economics Association.
    6. F. T. M. Kilima, 2006. "Are Price Changes in the World Market Transmitted to Markets in Less Developed Countries? A Case Study of Sugar, Cotton, Wheat, and Rice in Tanzania," The Institute for International Integration Studies Discussion Paper Series iiisdp160, IIIS.
    7. Pratap Kumar JENA, 2016. "Commodity market integration and price transmission: Empirical evidence from India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(608), A), pages 283-306, Autumn.
    8. repec:ers:ijebaa:v:v:y:2017:i:1:p:69-82 is not listed on IDEAS
    9. Pratap Kumar JENA, 2016. "Commodity market integration and price transmission: Empirical evidence from India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(608), A), pages 283-306, Autumn.
    10. Alston, Julian M. & Scobie, Grant M., 1987. "A Differentiated Goods Model Of The Effects Of European Policies In International Poultry Markets," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 19(1), pages 1-10, July.
    11. T.G. Saji, 2018. "Price transmission for natural rubber: India integration with world markets," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(617), W), pages 155-168, Winter.
    12. Arvind Virmani & Surabhi Mittal, 2006. "Domestic Market Integration," Indian Council for Research on International Economic Relations, New Delhi Working Papers 183, Indian Council for Research on International Economic Relations, New Delhi, India.
    13. Tatiana Papiashvili & Svetlana Saksonova & Ramona Rupeika-Apoga, 2017. "FDI Attraction: Comparative Analysis of the Baltic States and Georgia," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 81-93.
    14. Dahlgran, Roger A., 2000. "An Examination Of Futures Price Determination Through The Lens Of Market Integration," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36334, Western Agricultural Economics Association.
    15. Gali, Jyothi & Brown, Colin G., 2000. "Analysis Of Integration Between Queensland Feed And Malting Barley Markets," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123649, Australian Agricultural and Resource Economics Society.
    16. Abda Emam, 2023. "Saudi Fertilizers and Their Impact on Global Food Security: Present and Future," Sustainability, MDPI, vol. 15(9), pages 1-21, May.
    17. Diakosavvas, Dimitris, 1995. "How integrated are world beef markets? The case of Australian and U.S. beef markets," Agricultural Economics, Blackwell, vol. 12(1), pages 37-53, April.
    18. William Ridley & Stephen Devadoss, 2023. "Competition and trade policy in the world cotton market: Implications for US cotton exports," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(5), pages 1365-1387, October.
    19. Richardson, James W. & Duffy, Patricia A. & Wohlgenant, Michael K., 1986. "An Analysis Of Export Expansion Programs For Cotton," 1986 Annual Meeting, July 27-30, Reno, Nevada 278131, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Digal, Larry N. & Ahmadi-Esfahani, Fredoun Z., 2002. "Market power analysis in the retail food industry: a survey of methods," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), pages 1-26.
    21. repec:ers:journl:v:v:y:2017:i:2:p:69-82 is not listed on IDEAS
    22. Loy, Jens-Peter & Wehrheim, Peter, 1997. "Spatial Food Market Integration in Russia," 1997 Conference, August 10-16, 1997, Sacramento, California 197063, International Association of Agricultural Economists.
    23. Wang, Ping & Kinnucan, Henry W. & Duffy, Patricia A., 2017. "Effects of China's Rising Labor Costs on the World Cotton Market," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258431, Agricultural and Applied Economics Association.
    24. Muhammad Sarwar Zahid & Abdul Qayyum & Wasim Shahid Malik, 2007. "Dynamics of Wheat Market Integration in Northern Punjab, Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 817-830.
    25. Florine Livat, 2007. "Mesure des interactions de prix : une analyse des modalités de substitution parmi sept vins de Bordeaux," Économie et Prévision, Programme National Persée, vol. 180(4), pages 127-145.

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