Abstract:
In a market driven economy, price signals guide and regulate
production, consumption and marketing decisions over time, form and place.
Identifying the causes of price differences in interregional or spatial markets
has therefore become an important economic analytical tool to understand
markets better. If markets are not well integrated, price signals are distorted,
which leads to an inefficient allocation of resources. Further, it may
constrain sustainable agricultural development and aggravate inequitable
patterns of income distribution. This paper examines the degree of spatial
market integration in the regional apple markets of Pakistan using
cointegration analysis and monthly wholesale price data from January, 1996
to December, 2005. Results show that apple markets are perfectly integrated
and Quetta is the dominating market. The high degree of market integration
observed in this case is consistent with view that apple markets in Pakistan
are quite competitive and provide little justification for government
intervention designed to improve competitiveness to enhance market
efficiency.
