Tools to measure market integration

Outline:

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

Background:

• 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)