Testing the law of one price in gram markets of Pakistan

Hussain, Babar and Fahim, Muhammad Amir and Sajid, Muhammad (2011): Testing the law of one price in gram markets of Pakistan.

Abstract

Regional market integration in many agricultural commodities has been extensively studied for the insight, it provides in to the functioning of such markets; such studies provide valuable information about the dynamics of market adjustment, and whether there exist market imperfection, which may justify government intervention. This study used the monthly wholesale price (Rs. /40 kg) data from January 1991 to December 2006 of gram, in Logarithmic form and empirically estimated the degree of integration in gram markets of Pakistan using co integration analysis. Co-integration results show that all gram markets are highly Co-integrated in the Long run. The high degree of market integration observed in this case is consistent with the view that Pakistan’s gram markets are quite competitive and provide little justification for extensive and costly government intervention designed to improve competitiveness to enhance market efficiency.

• Item Type: MPRA Paper
• Language: English
• Keywords: Market Integration; Co-Integration; Gram Markets; Pakistan
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q13 - Agricultural Markets and Marketing ; Cooperatives ; Agribusiness

References

Dickey, D.A. and M.A. Fuller. 1981. Likelihood ration statistics for auto regressive time series with a unit root Econometrical 49;

Freedom, Z and A, Esfhani. 2006 Testing the law of one price in Chinese wholesales food market. Agribusiness 22(4): 569-589

Golettie, F. and Bacu 1994. Market liberalization in integration of maize markets in (Malawi. Agril, Eco 11(3): (311-324)

Govt. of Pakistan 2008 Economic Survey (2007-08) of Pakistan. Finance Divi. Econ. Advisor’s wing, Islamabad.

Govt. of Pakistan 2007) Agric. Statistics of Pakistan. The Ministry of Food, Agric. Livest. Econ. Wing, Islamabad.

Johansen, S. and K. Juselius 1990. Maximum likelihood and estimation and inference and co- integration with application to the demand for money. Oxford, Bulletin. of Economics. & Statistics 52: (170-207).

Johansen, S. 1988 Statistical analysis of co-integration of vectors. J.Econ. Dynamic & Control. 12: (231-254)

Kohl, S.R.L. and J.N. Uhl. 1998 Marketing of Agricultural produces. 5 Ed Macmillan public. New York.

Mushtaq. K.F. Abbas, Abedullah and A. Ghafoor. 2007. Testing the law of one price: Rice market integration in Punjab Pakistan. Pakistan. J. Agric. Sci. 43 (3-4) :- ?

Mushtaq, K.A Ghafoor and M. Dad 2008 Apple market integration: Implication for sustained able development.

The Lahore J. Econ. 13:1 (Summer 2008) pp. 129-138.

Raghbendra J. K.V .B Murthey and A. Sharma 2005. Market integration in wholesale rice market in India . ASARC working Paper 2005.

Tahir, Z and K. Riaz 1997. Integration of agricultural commodity market in Punjab. The Pakistan Dev. Revi. 36 (3) : 241-262.