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Integration of Food Markets in Mexico

Author

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  • Héctor M. Núñez

Abstract

This research examines spatial integration in Mexican regional-food markets, with an emphasis on the degree of processing. The analysis employs a pairwise approach to evaluate the convergence of price differentials for each item across city pairs. Additionally, it examines the influence of geographical and economic factors on price convergence. Key findings reveal: 1) there is no evidence of market divergence across food processing categories; 2) unprocessed items exhibit the highest levels of market integration and the fastest adjustment rates; 3) price differentials for unprocessed items consistently demonstrate nationwide integration; and 4) factors such as geographical proximity, road infrastructure, and the similarity in store density between cities significantly enhance the speed of price convergence toward long-run equilibrium.

Suggested Citation

  • Héctor M. Núñez, 2025. "Integration of Food Markets in Mexico," Working Papers 2025-01, Banco de México.
    • Handle: RePEc:bdm:wpaper:2025-01
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    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7B863B72D9-D555-FE7B-088C-38EA5C5E2AC2%7D.pdf
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    More about this item

    Keywords

    Food prices; Food processing degree; Spatial market integration; Distance;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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