Food Price Differences and Market Integration in China

Abstract

By applying the co-intergration appproach, this paper tests the market integration for the main agricultural products in China. Both long-run market integration and short-run market integration for the main agricultural products are tested and analysed. The study also calculates the Index of Market Connection (IMC) to measure the degree of market integration of the main agricultural products. The study reveals that the major agricultural product markets in China are integrated in long-run, but the degree of short-run market integration is very low. Therefore, in agricultural product markets, the transmission of price information is very slow and price changes across regions are not responsive. Based on the research results, the study also discusses some policy implications to improve the degree of market integration of agricultural products in China. Show more