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Testing Perfect Spatial Market Integration: An Application to Regional U.S. Cattle Markets

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  • Barry K. Goodwin
  • Ted C. Schroeder

Abstract

A rational expectations model is used to test spatial integration in regional slaughter steer markets. Market integration is examined using the concept of the law of one price across spatially separated markets. The approach and methodology used in this study overcomes three problems associated with standard approaches to testing market integration: simultaneity biases, an ignorance or misrepresentation of serial correlation, and a neglect of price expectations. Results indicate limited integration and suggest a shift in spatial price linkages between regional cattle markets between 1980 and 1987.

Suggested Citation

  • Barry K. Goodwin & Ted C. Schroeder, 1990. "Testing Perfect Spatial Market Integration: An Application to Regional U.S. Cattle Markets," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 12(2), pages 173-186.
    • Handle: RePEc:oup:revage:v:12:y:1990:i:2:p:173-186.
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    File URL: http://hdl.handle.net/10.1093/aepp/12.2.173
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    Cited by:

    1. Ismet, Mohammad & Barkley, Andrew P. & Llewelyn, Richard V., 1998. "Government intervention and market integration in Indonesian rice markets," Agricultural Economics, Blackwell, vol. 19(3), pages 283-295, December.
    2. Richard J. Sexton & Catherine L. Kling & Hoy F. Carman, 1991. "Market Integration, Efficiency of Arbitrage, and Imperfect Competition: Methodology and Application to U.S. Celery," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 568-580.
    3. Koontz, Stephen R. & Purcell, Wayne D., 2000. "Research Programs To Address Price Discovery Concerns," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36421, Western Agricultural Economics Association.
    4. Li, Yunhan & Li, Wenying & Dorfman, Jeffrey H., 2017. "Examining Dynamically Changing Cattle Market Linkages with Inventory as Controlled Transitions," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259151, Agricultural and Applied Economics Association.
    5. Sam Jones & César Salazar, 2021. "Infrastructure Improvements and Maize Market Integration: Bridging the Zambezi in Mozambique," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 620-642, March.
    6. Galang, Ivory Myka R., 2014. "A Spatial Integration Analysis of the Regional Fertilizer Markets in the Philippines," Discussion Papers DP 2014-36, Philippine Institute for Development Studies.
    7. Hayenga, Marvin & O'Brien, Dan, 1991. "Packer Competition, Forward Contracting Price Impacts, and the Relevant Market for Fed Cattle," Staff Papers 232401, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    8. McKendree, Melissa G. S. & Saitone, Tina L. & Schaefer, K Aleks, 2020. "Cattle Cycle Dynamics in a Modern Agricultural Market: Competition in Holstein Cattle Procurement," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304380, Agricultural and Applied Economics Association.
    9. Arnade, Carlos Anthony & Osborne, Stefan, 2001. "Measurement And Testing For Neutrality Of Foreign Price And Cpi Transmission In Russia," 2001 Annual meeting, August 5-8, Chicago, IL 20625, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Ankamah-Yeboah, Isaac, 2012. "Spatial Price Transmission in the Regional Maize Markets in Ghana," MPRA Paper 49720, University Library of Munich, Germany.
    11. Koontz, Stephen R. & Garcia, Philip, 1997. "Meat-Packer Conduct In Fed Cattle Pricing: Multiple-Market Oligopsony Power," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(1), pages 1-17, July.
    12. Carlos Arnade & Stefan Osborne, 2004. "Measurement and Testing for Equality of Foreign Price and Consumer Price Index Transmission in Russia," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 52(1), pages 107-125, March.
    13. Shrestha, Sundar S. & Frechette, Darren L., 2003. "Transfer Costs And Spatial Price Efficiency In The Nepalese Tomato Markets," 2003 Annual meeting, July 27-30, Montreal, Canada 22076, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Melissa G.S. McKendree & Tina L. Saitone & K. Aleks Schaefer, 2021. "Oligopsonistic Input Substitution in a Thin Market," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1414-1432, August.
    15. Jordan, Kenrick H. & VanSickle, John J., 1995. "Integration And Behavior In The U.S. Winter Market For Fresh Tomatoes," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(1), pages 1-11, July.
    16. César Salazar & Andrés Acuña‐Duarte & José Maria Gil, 2023. "Drought shocks and price adjustments in local food markets in Chile: Do product quality and marketing channel matter?," Agricultural Economics, International Association of Agricultural Economists, vol. 54(3), pages 349-363, May.
    17. Ralph Bierlen & Eric J. Wailes & Gail L. Cramer, 1998. "Unilateral reforms, trade blocs, and law of one price: MERCOSUR rice markets," Agribusiness, John Wiley & Sons, Ltd., vol. 14(3), pages 183-198.

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