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. Pr...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
2013
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| 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 |
| Summary: | 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. |
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