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Distinguishing Between Equilibrium And Integration In Markets Analysis

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  • Li, Jau-Rong
  • Barrett, Christopher B.

Abstract

This paper introduces a new market analysis methodology based on maximum likelihood estimation of a mixture distribution model incorporating price, transfer cost, and trade flow data. Not only does this method obviate statistical problems associated with conventional price analysis methods, it also permits differentiation between market integration and competitive market equilibrium. The model generates estimates of the frequency of alternative regimes, combinations of which provide useful, intuitive measures of intermarket tradability, competitive market equilibrium, perfect integration, segmented equilibrium, and segmented disequilibrium. An application to trade in soybean meal among Pacific Rim economies demonstrates the usefulness of the method.

Suggested Citation

  • Li, Jau-Rong & Barrett, Christopher B., 1999. "Distinguishing Between Equilibrium And Integration In Markets Analysis," Working Papers 14607, International Agricultural Trade Research Consortium.
    • Handle: RePEc:ags:iatrwp:14607
    DOI: 10.22004/ag.econ.14607
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    References listed on IDEAS

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    Cited by:

    1. Raper, Kellie Curry & Thornsbury, Suzanne & Aguilar, Cristobal, 2009. "Regional Wholesale Price Relationships in the Presence of Counter-Seasonal Imports," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 41(1), pages 271-290, April.
    2. Harvey, David R., 2004. "European Perspective on Market Integration: Lessons from NAFTA," 2004 NAAMIC Workshop I: North American Agrifood Market Integration: Current Situation and Perspectives 163852, North American Agrifood Market Integration Consortium (NAAMIC).
    3. Fausti, Scott W. & Diersen, Matthew A., 2004. "The Voluntary Reporting System's Ability to Provide Price Transparency in the Cash Market for Dressed Steers: Evidence from South Dakota," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(3), pages 1-14, December.
    4. Harvey, David R., 2004. "European Perspective On Market Integration," North American Agrifood Integration: Situation and Perspectives, May 2004, Cancun, Mexico 16734, Farm Foundation.
    5. Kaitibie, Simeon & Nganje, William E. & Brorsen, B. Wade & Epplin, Francis M., 2003. "Optimal Grazing Pressure Under Output Price And Production Uncertainty With Alternative Functional Forms," 2003 Annual meeting, July 27-30, Montreal, Canada 22020, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Moser, Christine M. & Barrett, Christopher B. & Minten, Bart, 2005. "Missed opportunities and missing markets: Spatio-temporal arbitrage of rice in Madagascar," 2005 Annual meeting, July 24-27, Providence, RI 19338, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Escobal, Javier, 2005. "The Role of Public Infraestructure in Market Development in Rural Peru," MPRA Paper 727, University Library of Munich, Germany.
    8. Anton Bekkerman & Barry K. Goodwin & Nicholas E. Piggott, 2013. "A variable threshold band approach to measuring market linkages," Applied Economics, Taylor & Francis Journals, vol. 45(19), pages 2705-2714, July.
    9. Bekkerman, Anton & Goodwin, Barry K. & Piggott, Nicholas E., 2009. "Spatial Analysis of Market Linkages in North Carolina Using Threshold Autoregression Models with Variable Transaction Costs," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49282, Agricultural and Applied Economics Association.
    10. Barrett, Christopher B. & Li, Jau-Rong & Bailey, DeeVon, 2000. "Factor And Product Market Tradability And Equilibrium In Pacific Rim Pork Industries," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(1), pages 1-20, July.
    11. Chao Yang Dong & Bei Bei Ma & Chun Xia LU, 2020. "Spatio-Temporal Dynamics of Feed Grain Demand of Dairy Cows in China," Sustainability, MDPI, vol. 12(2), pages 1-17, January.
    12. Javier Escobal & Arturo Vásquez, 2005. "Market integration for agricultural output markets in Peru: the role of public infrastructure," Urban/Regional 0507003, University Library of Munich, Germany.
    13. Vollrath, Thomas L., 2003. "North American Agricultural Market Integration And Its Impact On The Food And Fiber System," Agricultural Information Bulletins 33639, United States Department of Agriculture, Economic Research Service.

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    International Relations/Trade;

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