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Cointegration and Market Integration: An Application to the Potato Markets in Rural West Bengal, India

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  • Basu, Jyotish Prakash

Abstract

The paper attempts to examine the market integration with the help of cointegration test on the prices of potato of Hooghly district in West Bengal. The analysis has been made at two levels, namely at the level of wholesale markets and at the retail markets. The cointegration test by Johansen and Jeselius (1990) applied to weekly prices of three important potato markets in Hooghly district suggest that the markets are integrated. Our results revealed that price signals and information are transmitted smoothly across the markets. These results have important policy implications. In a situation when potato markets are spatially integrated the government may think of reducing or even withdrawing its efforts to influence the price in the market. The finding of the market integration appears to be quite significant for the success of price policy and market liberalisation programs undertaken in India.

Suggested Citation

  • Basu, Jyotish Prakash, 2006. "Cointegration and Market Integration: An Application to the Potato Markets in Rural West Bengal, India," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25705, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae06:25705
    DOI: 10.22004/ag.econ.25705
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    References listed on IDEAS

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    Cited by:

    1. Olli Salmensuu, 2017. "A Potato Market Integration Analysis for India," Review of Market Integration, India Development Foundation, vol. 9(3), pages 111-138, December.
    2. 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.

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