Market integration: main questions
– What is market integration?
– Why is it important? Link with trade
– How do we measure it?
– Some examples
Market integration has to do with price transmission
– But the methods used to study price transmission rely mainly on time
series analysis (particularly cointegration…)
– A refresher is therefore necessary before measuring MI
• A growing literature on the topic in the past thirty years
• The 2008 food crisis called for questions on price signals transmission
• Main idea (Ravallion, 1986, 1997 ; Sen 1981):
– More integrated markets yield lower price volatility
– More welfare gains as local markets become protected from idiosyncratic shocks
– Surplus areas are linked to deficit ones […] (see below for the full document)