How Is the Liberalization of Food Markets Progressing? Market Integration and Transaction Costs in Subsistence Economies

The paper proposes a modification of Baulch's parity bounds model to measure the market integration of food markets in developing countries. Instead of extrapolating a single observation of transaction costs, it estimates transaction costs. Predicted transaction costs compare well with survey data of traders. Probabilities of market regimes, computed on the basis of predicted transaction costs, fluctuate significantly and do not support fixed regime probabilities over time. The probability of market integration with trade decreases consistently during food shortages, increasing either the probability of no trade or loss-making trade or the probability of profitable but unexploited trade opportunities. The data support a negative trend in market integration with trade.

Bibliographic Details

Main Author:	Zant, Wouter
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	2013-01
Subjects:	ACCOUNTING, ADVERSE IMPACTS, AGRICULTURAL COMMODITY, AGRICULTURAL DEVELOPMENT, AGRICULTURAL ECONOMICS, AGRICULTURE, ARBITRAGE, BAGGING, BANK CREDIT, CAPACITY BUILDING, COMPARATIVE ADVANTAGE, COMPETITIVE EQUILIBRIUM, COMPETITIVE MARKET, COMPETITIVE MARKETS, CONGESTION, CONSTANT RETURNS TO SCALE, CONSUMER PRICE, CONSUMER PRICE INDEX, CONSUMERS, COSTS OF TRANSPORT, CREDIT CONSTRAINTS, DEMAND FOR TRANSPORT, DEMAND FOR TRANSPORT SERVICES, DERIVATIVES, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DEVELOPMENT PROJECTS, DIESEL, DUMMY VARIABLES, ECONOMETRICS, ECONOMIES OF SCALE, EFFICIENT MARKETS, ELASTICITY, EQUATIONS, EXCESS DEMAND, EXCESS SUPPLY, EXPORTER, EXPORTS, FAMINE, FOOD AID, FOOD MARKETS, FOOD POLICY, FOOD PRICES, FOOD REQUIREMENTS, FOOD SECURITY, FOOD SHORTAGE, FOOD SHORTAGES, FREIGHT, FUEL, FUEL PRICE, FUEL PRICES, FUTURE RESEARCH, GDP, GOVERNMENT INVOLVEMENT, HAZARDS, HIGH TRANSPORT, HOMOGENEOUS GOOD, IMPERFECT COMPETITION, INCREASING RETURNS, INCREASING RETURNS TO SCALE, INDEX NUMBERS, INSPECTION, INTERNATIONAL BANK, INTERNATIONAL TRANSPORT, INTERPOLATION, INVESTING, LENDING INTEREST RATES, LEVIES, LIQUIDITY, LIQUIDITY CONSTRAINTS,
Online Access:	http://documents.worldbank.org/curated/en/2013/01/17195348/liberalization-food-markets-progressing-market-integration-transaction-costs-subsistence-economies http://hdl.handle.net/10986/12154
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